Plastics should not be blindly chased after a short time

In the previous period, due to the sharp drop in international crude oil prices and the oversupply of fundamentals, the price of plastics all the way down and turned into an oscillating trend last week. However, with the easing of the US dollar index, the deviation between Cushing’s crude oil inventories and EIA crude oil inventories is further deepening, and the weakness of crude oil prices is expected to be eased.

On the supply side, plastics supply is expected to shrink further in the near future as chemical companies overhaul and stop production. On the demand side, the central bank boosted the favorable policies for the real estate industry, coupled with the arrival of plastic film production season, which will strongly support plastic prices. On the whole, the factors that contributed to the decline in plastics are expected to show improvement. At this time, plastics should not be blindly pursued.

Crude oil prices are expected to stop falling

Thanks to the strong recovery of the U.S. economy, the U.S. dollar index rose from 79 in early July to around 85 o'clock in early October. In addition, EIA announced a sharp rise in crude oil inventories. Cushing crude oil inventories rose in stages. International crude oil prices all the way. Go down. However, in September, the U.S. economic indicators all declined to some extent. In September, the ISM U.S. purchasing managers' index (PMI) fell from a three-month high of 59 points to 56.6 in August, which was less than expected. At the same time, the level of inflation in the United States has further declined, and the monthly rate of CPI in August unexpectedly decreased by 0.2%. These data on the one hand show that the recovery of the U.S. economy has not been as strong as the market expected. On the other hand, the lower level of the CPI also leaves room for monetary policy. Therefore, this directly led to the continuous oscillation of the dollar index in the last two weeks.

As the U.S. dollar index has entered an oscillatory trend, there has been a bullish change in the supply and demand of crude oil. After a strong drop in crude oil prices in this round, although it is difficult to turn the trend upwards in technology, there will be greater resistance in the future. Therefore, the factors that led to the continued weakness in the price of crude oil and the continued weakness in plastic prices will be effectively mitigated.

Oversupply situation has changed

On the supply side, as the spot price of plastics goes down, the chemical companies in the market will have a very strong willingness to price, and the intention of reducing the price protection is obvious. Recently, Daqing Petrochemical's 300,000-ton full-density production capacity was converted to HDPE to further ease the plastic inventory; the linear production capacity of China Coal’s 300,000 tons began to be repaired on September 29 for 20 days; the full-density production capacity of Shenhua’s Baotou is also under maintenance. Will convert HDPE. It is estimated that 10 million tons of plastic will be converted to production and repairs in October. At the same time, current PE inventories have continued to decline at high levels for many days, and PE stocks fell by 2.38% at the end of September.

Demand, the prosperity of China's real estate market has declined since the beginning of this year, but the central bank and the China Banking Regulatory Commission jointly issued a notice on furthering the work of housing financial services by the end of September, which is expected to serve as a booster for the real estate market. With the improvement of the real estate market, the demand for plastic pipes is expected to increase significantly. At the same time, it is the peak season for the production of solar films. With the advent of the peak season after the film storage period, the start-up rate of agricultural film is expected to continue to rise. Therefore, in the real estate market is expected to pick up and plastic film consumption peak season comes together, the future plastic demand will further increase.

In general, as chemical companies are interested in converting production and overhauling and controlling plastic production, future demand will increase. At a time when both supply and demand are changing, plastics will likely stop. From a technical point of view, plastics gapped lower after opening on October 10th, but after the last week, plastics prices oscillated in the range of 9850-9450 yuan/ton. It is suggested that the holders of plastic blanks in the early period can only stay away from the market.