China's PP Inventory Rose W-O-W on July 20

1. China’s Total PP Inventory Analysis

According to SCI, China’s PP inventory on July 20 increased by 1.12% from Jul 13. Therein, the PP inventory at major PP producers mounted up, while that at ports and trade companies slipped.

2. China’s PP Inventory at Petrochemical Companies Analysis

According to statistics, the PP inventory at major producers on July 20 increased by 3.13% W-O-W. The PP futures prices dropped this week, so buyers’ purchasing interest weakened. The sales volume of PP at producers decreased. The output loss caused by the maintenance was about 56.1kt, up 17.36% W-O-W. During the week ended July 20, the unit at Oriental Energy New Material (Ningbo) underwent maintenance, while the unit at North Huajin Chemical Industries Group resumed production.

3. China’s PP Inventory at Ports Analysis

The PP inventory at ports on July 20 decreased by 7.59% W-O-W. In the week ended July 20, the homo PP import volume was sparse from last week. The foreign traders had low inventory. The PP inventory at some Middle Eastern traders slipped. The PP inventory at ports kept slipping.

4. China’s PP Inventory at Trade Companies Analysis

The PP inventory at trade companies on July 20 decreased by 1.05% W-O-W. The sample trade companies suffered slack sales, so they showed poor appetites in building the stock. Thus, the inventory at trade companies declined a little.

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.

As the previously-stopped units resume production successively, the supply of PP is supposed to rise gradually. But the contradiction between the supply and demand is not very obvious in the short run. The price spread between raffia materials and copo PP is large. The PP futures prices keep firm, supporting the spot PP market. Downstream producers maintain basic purchases. SCI predicts that the PP market prices will fluctuate at high levels.