On June 30th, the Engineering Plastics Index was 666 points, a decrease of 41.63% from the highest point in the cycle of 1141 points (2018-09-09), and an increase of 17.67% from the lowest point of 566 points on May 6th, 2020. (Note: The cycle refers to the period from December 1st, 2011 to the present)
In the first half of 2023, the prices of various domestic engineering plastics products mostly remained stagnant and fell. According to the monitoring of the Commodity Market Analysis System of the Business Society, as of June 30th, there were 2 products that rose and 3 products that fell on the list of engineering plastic prices. The main commodities that have increased are PET (+0.56%) and PA6 (+0.13%); The main commodities that fell were PA66 (-9.58%), PC (-14.02%), and POM (-20.33%).
In the first half of the year, the fundamental patterns of various products in the engineering plastic industry had their own strengths and weaknesses. The price trend in the first quarter naturally showed significant differentiation, but the common point was the general decline in the second quarter. As of the end of June, only PET and PA6 were able to maintain the price level at the beginning of the year, with other products experiencing even greater declines. Among the market bearish factors, in addition to the sustained high load and low consumption in the industry, the main impact comes from the weakening of international crude oil in the upstream of Tongtong. On the other hand, the current global impact of imported inflation still exists, and the profitability of engineering plastic production enterprises is still facing challenges. There is little improvement in the operational risks of factories at all levels. Overall, in the first half of the year, engineering plastics saw a combination of bearish conditions and a decline in the market.
PET
In the first half of the year, PET bottle level prices strengthened in the first quarter and fell back in the second quarter. The overall supply in the domestic market was tight from January to April, and after May, the market found a balance between supply and demand. Downstream purchases will be made on demand within six months, and the negotiation atmosphere will gradually weaken from being positive. The overall support for the raw material end in the early stage is relatively strong, and it tends to stabilize in the second half of the second quarter. At present, the offer operation of PET manufacturers and merchants is biased towards giving up profits and taking orders, and the price basically returns to the level at the beginning of the year. It is expected that the PET market may undergo narrow consolidation in the short term,
PA6
The domestic PA6 market rebounded after rising in the first half of the year. Within six months, the operating rate is relatively stable, and the overall industry load level is around 70% with narrow adjustment and operation, while the supply remains sufficient. Caprolactam at the cost end supported the market of PA6 in the first half of the year. During the period, the supply of Caprolactam was generally tight, coupled with the rising market of pure benzene, which was consolidated after rising within half a year. The domestic PA6 market rebounded after rising in the first half of the year. Within six months, the operating rate is relatively stable, and the overall industry load level is around 70% with narrow adjustment and operation, while the supply remains sufficient. Caprolactam at the cost end supported the market of PA6 in the first half of the year. During the period, the supply of Caprolactam was generally tight, coupled with the rising market of pure benzene, which was consolidated after rising within half a year. The downstream spinning and weaving industries, the main force of PA6, have a moderate load in the first half of the year. Although the pre holiday stock market has driven demand to some extent, the actual daily trading is mostly concentrated in low-end sources of goods. The situation of new purchases in the second half of the second quarter was poor, with buyers being cautious and orders insufficient, resulting in a decrease in demand for PA6 chips and a drop in prices. It is expected that the PA6 market may continue to fluctuate and consolidate in the short term.
PA66
The trend of the domestic PA66 market in this range has been fluctuating and declining in a stepped manner. In terms of industry load, in the past six months, the load of domestic PA66 enterprises has increased first and then decreased, gradually decreasing from nearly 70% to the current 60%. The spot supply of various brands continues to be abundant, and the supply pressure becomes long-term. The normalization of destocking operations has led to a gradual decline in spot prices due to this bearish situation. In terms of upstream Adipic acid, the supply of goods was tight at the end of January to support the rise. Later, due to the impact of higher commencement and lower pure benzene, it fell in two stages, which did not support the cost of PA66. Terminal enterprises focus on maintaining production within six months of receiving goods, and buyers generally have strong resistance towards high priced sources. The current trend of PA66 shows a weak supply and demand trend, and it is expected that PA66 may continue to consolidate the market in the short term.
PC
According to the Big data monitoring of the price of the business community, the PC market in China entered a downward channel after a short stalemate in the first half of the year, and the negative market continued for nearly five months. The main factor that troubled the PC market in the first half of the year was the high start-up rate of the industry. In January, the overall operating rate of domestic PC was around 60%, and then rapidly increased to a three-year high of 70% load. The stock is abundant, and the supply pressure is profound. In the first half of the year, it smoothed out a group of positive results, resulting in continuous bearish guidance on the market. Upstream bisphenol A had already taken on last year’s low price at the beginning of the year, but the market was weak and volatile within six months, with an overall decline, which provided poor support for PC costs. Downstream buyers just need to maintain production, and operators have a more wait-and-see mentality. In the past six months, the auction situation has gradually declined. The starting position of terminal enterprises within the range is not high, the actual stocking consumption is weak, and market trading is light. Traders’ mentality has weakened. It is expected that the PC market will continue to maintain a supply-demand game in the second half of the year, and prices may be strongly correlated with the adjustment of operating rates.
POM
In the first half of this year, the POM market emerged from a stalemate in the first quarter and a rapid decline in the second quarter. In the first quarter, domestic POM supply and demand both increased, and in February, there was even a phased shortage of goods and a surge in speculation. But as the high load in the industry continues, inventory pressure from factories and society begins to accumulate. According to statistics from Business Society, the average operating rate of POM in the first half of the year was around 90%, with the industry approaching full capacity for most of the period. In addition, upstream formaldehyde initially increased and then decreased, resulting in weak support for both POM supply and cost in the second quarter. The demand side of enterprise consumption is also difficult to follow up with the continuous high load. In addition, as the temperature heats up and some downstream areas are affected by limited electricity, the operating rate is low, and actual transactions have weakened, exacerbating the stagnation of on-site supply. Although the market has experienced a decline and buyers are following suit, it is still recommended to closely monitor the trading situation in the POM industry.
Future Market Forecast
In the first half of 2023, the market for the five types of engineering plastics mentioned above generally fell three times and remained stable, with overall gains being minimal and losses being significant. Within six months, the industry market has been weak and difficult to improve. Compared with the same period last year, the price position of each product is basically at a three-year low. At the same time, international crude oil fluctuated and fell, and the support for engineering plastics’ common remote raw materials has cooled. In addition, the macroeconomic environment has not provided sufficient support for the engineering plastic industry, and polymerization enterprises are generally cautious in pricing. They often lower the factory price to reduce operational risks. Therefore, the commodity market analysis system of the Business Society believes that the fundamentals of the engineering plastic industry were weak in the first half of the year, and the market momentum was poor. At present, engineering plastics is about to gradually enter the off-season of demand, and it is expected that if the market turns positive, it may wait until the traditional peak season of “nine gold and ten silver”.
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