New production capacity increased mid supply pressure

New production capacity increased mid supply pressure
The first three quarters of 2016, domestic Fujian sinoview Montana coal and a total of 650 thousand tons of PP production capacity, from the four quarter production plan, Xinjiang Shenhua in October has been put into operation, Qinghai Saline Lake, Ningbo Fuji, co-founder of Transit plan 11 moonrise PP products in Huating, Changzhou, Xi Fude long Thai energy capacity production probability is postponed to 2017 big. So at the end of 2016, the domestic PP production capacity increased by 1 million 800 thousand tons to 19 million 600 thousand tons, production capacity growth rate of 10.12%. Taking into account the new production capacity and the pre maintenance device brought to restart the supply increases, estimates for the four quarter PP total output of 4 million 780 thousand tons.
From the import situation, from 1 to September, total imports of PP 3 million 238 thousand tons, down 12.3%. From 8 to September, the domestic spot market focus has been significantly improved, and significantly narrow the price upside down. PP is expected in the fourth quarter of total imports will reach 1 million 100 thousand tons of high level. This fourth quarter domestic PP total supply will reach 5 million 880 thousand tons in the three quarter, an increase of nearly 11%.
Low stage Petrochemical stocks is conducive to very price
The National Day PP futures market rose upward, traders and downstream production enterprises gradually rose with the buying of goods, so although the PP factory operating rate has been significantly improved than before, but as of October 18th, petrochemical factory inventories remained at 590 thousand tons of low level, taking into account the current downstream of PP production in the traditional peak season demand, orders and profit level. This is conducive to the late petrochemical price pull up operation.

Overall, the national day of the PP rose futures gapped opened the third wave of rising off the PP futures, in the downstream part of restocking will lead to prices rising stage, but considering the current social inventory level and late supply growth potential, this round of rebound to more than two times before the rise. With the November release of new capacity and maintenance device brought to restart the supply side to accelerate the recovery, the whole society inventory will be significantly increased, then the price will be PP finished lower trend.