Supply-Demand Patterns Change Fosters PP Grade Production Adjustment
Preamble: The long-awaited price rise has indeed brought some vitality to the PP market, and market transactions have improved. With expectations of improved demand in the later period, there are more views that the market will reverse and stage a rise in the future. However, the expectation of increased supply pressure in the future stays strong with a huge capacity base and continuous launch of new capacity. In other words, the bearish sentiment caused by the supply growth has never been completely eliminated. As a producer, it is important to proactively seek changes and gradually adjust production schedules in order to gain more advantages in the increasingly fierce competition in the market.
With producers actively seeking change, PP varieties are obviously differentiated.
With the overall PP output expected to increase, the producers’ production schedule will be adjusted based on actual market demand and the production situation of competing enterprises. According to SCI, except for the varieties of pipes, high-MFR fibers, BOPP films and raffia materials, other varieties are expected to see output increase to varying degrees in March. Among them, medium-MFR copolymer, thin-wall injection molding and CPP film are expected to see a more noticeable increase in output. Medium-MFR PP copolymer output is predicted to be around 210kt in March, rising the most by 86% M-O-M, while PPB material output may decrease the least by 11% M-O-M to 13kt. Besides, PP raffia output will probably slide as well in March.
Overall, the production schedule plans for next month have changed significantly at PP producers, and the product structure is obviously differentiated, which is also related to the current market operation. First, the adjustment of the production structure can be in line with changes in demand. Second, products can also be prevented from being produced at random through peak-shifting production, and excessive price drops of similar products due to a periodic increase in supply can also be avoided. That is conducive to PP producers in terms of market competition. New orders from end users are inadequate, even if end plants resumed business successively, resulting in delayed start-up time of most PP downstream enterprises compared with previous years. Downstream enterprises are wary about buying PP, and the PP inventory at producers and traders remains high after the Spring Festival holiday. Thus, market participants represent a dearth of confidence in the market performance in March and April, the small demand peak season. Also, the adjustment in production by producers is accelerated.
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