China Polypropylene (PP) Inventory Rose W-O-W on Aug 9

According to SCI, China’s PP inventory on August 9, 2019 rose by 3.63% from June 28. Therein, the PP inventory at major PP producers headed up, while that at ports and trade companies headed down.

2. China’s PP Inventory at Petrochemical Companies Analysis

According to statistics, the PP inventory at major PP producers on August 9, 2019 increased by 5.40% W-O-W. The loss volume of output caused by the maintenance was about 61kt, down 1.7% W-O-W. The units at PetroChina Daqing Refining & Petrochemical old line, Dalian West Pacific Petrochemical and Zhongtian Hechuang Energy first line underwent maintenance during the week ended August 9. Sinopec Jingmen Company restarted the unit this week. PetroChina Daqing Refining & Petrochemical new line, Ningbo Fund Energy, Shenhua Xinjiang Energy, Sinopec Yangzi Petrochemical and Sinopec Beijing Yanshan Company second line will undergo maintenance during the week ended August 16, so the output loss will continue to mount up. The PP inventory at producers will increase despite the fact that maintenance will be intensive in August, as buyers show weak appetites in purchasing amid soft PP market.

3. China’s PP Inventory at Ports Analysis

The PP inventory at ports on August 9, 2019 decreased by 6.06% W-O-W. In the week ended August 9, 2019, the homo PP import volume only changed a little from last week. Traders had low inventories of imported resources. Limited resources were from S-Oil in South Korea. There was no spot inventory basically at some North China ports.

4. China’s PP Inventory at Trade Companies Analysis

The PP inventory at trade companies on August 9, 2019 decreased by 4.10% W-O-W. The trading activities were muted. Then traders actively sold resources, so the inventory declined slightly.

5. Summary

The PP futures went public on February 28, 2014, since then, the financial property of the spot products became stronger. The quantifiable data about supply-demand fundamentals played a more important role in judging PP market trend. The data of production and import were transparent and hysteretic, hence, the data were hard to become the main factor to forecast the market trend. Concerning raw materials inventory, it was difficult to collect its data, let alone collect it timely. Thus, the inventory data became an irreplaceable and prominent factor to analyze the future market situation.

Dongguan Juzhengyuan Technology restarted its unit, and products produced by Zhong’an United Coal Chemical have entered the market. But the overall operating rate of PP was not high recently, so the PP inventories were not very ample.

There are more units undergoing maintenance at PP producers, which will cause a decline in PP supply. Besides, the production scheduling rate of PP raffia declines, so its supply is insufficient. That supports the PP market. Accordingly, SCI predicts that PP inventory level at Sinopec and PetroChina will decline.