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Three main factors lead to the chemical rebound is not synchronized

wallpapers News 2020-07-11
On the first trading day after the Spring Festival of

, the trend of chemical products was obviously differentiated. Among them, the trend of plastics (including PE / > LLDPE PP) methanol was stronger than PTA PVC. The author believes that the main reasons are industry concentration, raw material cost differences downstream substitutability. In the context of crude oil rebound setback, chemical products overall rebound height is limited, even look for arbitrage opportunities between them.

crude oil rebound setback.

for petrochemical products, crude oil price is the most important parameter leading its large level main trend. In the fourth quarter of 2014, the international crude oil fell sharply. Although the surplus of some chemicals was not very serious, even the reverse price difference structure of high rising water in spot appeared, such as PP LLDPE, the whole chemical products were once greatly let down. From the end of January to the first ten days of February this year, international crude oil rebounded sharply, domestic chemicals also followed the strong rebound. From the perspective of crude oil,

are actually the initial end of cost change. During the Spring Festival holiday, international crude oil was obviously frustrated went down again. Although there are recent reports that the number of oil drilling platforms in operation in the United States has decreased for nine consecutive weeks to 1140, which is the lowest level since December 2011, however, it may be far from the actual production reduction, some of the closed oil drilling platforms may be ineffective or offset capacity. In addition, March April are the most unfavorable months for crude oil. At that time, not only will the dem not improve significantly, but also the use of crude oil will be reduced due to refinery overhaul, the change in production will not be immediate. Therefore, the oversupply is likely to deteriorate further. It is estimated that the global surplus will still be as high as 2-2.5 million barrels / day.

OPEC still have great internal differences, the possibility of short-term OPEC meeting to reduce production is still very low. On the one h, the oil minister of Nigeria, OPEC's rotating chairman, said that if oil prices continue to fall, OPEC may hold an emergency meeting. Ecuador agreed to hold an emergency meeting with OPEC, which shows that the position of OPEC oil producing countries not to cut production to push up oil prices may be increasingly wavering. On the other h, the leaders of the Gulf oil producing countries led by Saudi Arabia have repeatedly stressed that no measures will be taken to prevent the decline in oil prices, there is no need to hold additional meetings before the June meeting.

in addition, another important factor to suppress the rebound of crude oil price is oil inventory. The U.S. Energy Information Agency (EIA) recently reported that US crude oil inventories increased by 7.7 million barrels in the week of February 13, reaching a record high of 425.6 million barrels. The average of the past five years was more than 20%. The three factors of

lead to the trend differentiation of chemicals.

are the monopoly of upstream industries. For plastics (llpde PP), the main raw materials are ethylene propylene. 90% of the domestic raw materials are from Sinopec PetroChina, a large part is imported. In addition, about 70% more than 60% of the existing capacity of LLDPE PP are affiliated or affiliated enterprises of Sinopec Shuangxiong. As the industry concentration is too high, the rebound amplitude time of LLDPE PP will be relatively enlarged when crude oil rebounds. Of course, with the rise of coal to olefins, the privatization speed of PP production capacity is accelerated, which determines that PP growth is not as good as LLDPE in the long run. In contrast, PTA PVC have a higher proportion of private production capacity than plastics, the degree of spot marketization is better. Therefore, the prices of PTA PVC are relatively flexible will not show the characteristics of upward amplification downward resistance.

are followed by the difference of raw material cost. In terms of cost, driven by the sharp rebound of crude oil, the prices of ethylene propylene rose by 9% 8% respectively in late February compared with early February. This makes LLDPE PP prices also rebound driven by costs. In comparison, there are two kinds of PVC processes: calcium carbide process ethylene process. In the case of no rebound in domestic coal price, the domestic PVC production cost dominated by calcium carbide process has not significantly increased. Therefore, the trend of PVC which belongs to general resin (plastic) is obviously weaker than LLDPE PP.

have different substitutability. As general-purpose resins, LLDPE PP do not have strong substitutability for other products in agricultural film, injection molding woven bags. However, PVC PTA can be replaced by TPE cotton respectively in downstream applications, so once they do not have advantages in cost, they are relatively easy to be replaced. In the aspect of methanol, due to the rise of methanol to olefin technology, it has no substitutability at present.

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