China’s Polypropylene Inventory Decreased W-O-W on Oct 20

1. China’s Total PP Inventory Analysis

According to SCI, China’s PP inventory on October 20 decreased by 6.45% from October 13. Therein, the PP inventory at petrochemical companies and ports headed down, while the PP inventory of traders inched up.

2. China’s PP Inventory at Petrochemical Companies Analysis

According to statistics analysis, the PP inventory at petrochemical companies on October 20 decreased by 7.23% W-O-W. The loss of production amid turnarounds in the week ended October 20 was 55.3kt, which increased by 22.35% from last week. The 2PP line at Sinopec Shanghai Petrochemical, and units at North Huajin Tongda Chemical Industries and Pucheng Clean Energy Chemical underwent maintenance as planned. The PP futures prices increased this week, boosting the transactions in the spot PP market. Thus, the inventory at petrochemical companies declined rapidly.

3. China’s PP Inventory at Port Analysis

The PP inventory at ports on October 20 decreased by 12.53% W-O-W. In the week ended October 20, the PP import volume remained steady from last week. Some resources from Saudi Arabia arrived at ports successively, the number of which was more than the number of goods that were presold. However, as the copo PP prices increased, downstream producers held cautious attitudes towards buying. As China’s PP prices continued rising, USD settlement prices reached the purchasing anticipation of companies who had purpose for write-offs. Deals in the processing trade with imported materials mounted up, thus, the inventory at ports declined.

4. China’s PP Inventory at Trade Companies Analysis

The PP inventory at trade companies on October 20 increased by 0.67% W-O-W. The sample companies finished the PP sales volume according to the schedule, so the inventory at these companies didn’t change a lot.

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.

On the supply side, the planned turnarounds of units will reduce later, leading to the rebound of supply. Then the supply will become ample. On the demand side, due to the environmental protection inspection, the rigid demand of some downstream users will be likely to reduce. In addition, as of now, traders’ demand for hedging produces a noticeable effect on the PP market. In the meantime, some inventory in the PP market becomes recessive. According to SCI, the supply pressure will not turn obvious in the short-run PP market. And PP prices will be mainly impacted by the PP futures.