#Conclusion for July, 2018#
In July, the Chinese domestic propylene glycol market continued to decline, after the middle of the month narrow range of increase, the end of the month again downward. Supply and demand dominate the market in July, and there are open and shutdown among the factories, raw material dependency is not high. In August, the supply of raw materials for PO increased slowly in the first half of the month, while Depu will start to work at the beginning of the month. The overall supply will also be increased. The downstream terminal is still in the off-season. The domestic demand is weak, and the contradiction between supply and demand is still inextricably intertwined.
1. Review of price trend of propylene glycol
1.1 Trend of propylene glycol correlation index
During July, the price index of SCI99 Information Alcohol fluctuated. As of the end of the month, the SCI99 Alcohol Index was 905.04, sequential increased 46.49 points, or up 5.47%, 32 points higher than the same period of last year, or up 3.67%. Other UPR raw materials such as ethylene glycol and diethylene glycol, which have high correlation with MPG, also fluctuated upwards. The growth rate of ethylene glycol was slower in the first half of the month, and the growth rate increased in the latter part of the month. The monthly increase rate was 9.15%. Diethylene glycol also increased in a narrow range in the first half, and the growth rate increased higher, month-on-month increase rate is 8.4%.
Pic 1. The price index of SCI99 Information Alcohol
1.2 Review of Chinese domestic market price trend of propylene glycol
In July, the first half of the month is light and weak, and then slowly weakens after a small rebound in the middle of the month. The end of the month is in the off-season and there is still environmental pressure in many places. The downstream restarted operation is low and the downstream off-season atmosphere continues to deepen. Although the mono propylene glycol unit has also been under repaired, the influence of imported goods source is still there. Therefore, the supply and demand relationship continues to dominate the market’s dull and volatile trend.
Pic 2. The trend chart of MPG Industrial Grade
Pic 3. The trend chart of MPG Pharmaceutical Grade
2. Analysis of supply and demand situation of propylene glycol market
2.1 Analysis of propylene glycol device operating rate, plant dynamics, and supply comparison
In terms of production, the factories are open and shutdown in July. Haike restarted in the middle of the month, Linggu monthly shutting down and maintenance for about two weeks, Depu is still shutting down this month and it is expected to restart in the beginning of next month, Shida shutting down at the end of this month, the output of July is less than that in June. It’s estimated that the output of propylene glycol in July was 25,500 tons, which was 2200 tons less than that in June.
Pic 4. Statistical Chart of Propylene Glycol Production Capacity Operation Rate Between 2017 and 2018
2.2 Propylene glycol stock analysis
At present, Depu is still overhaul. It is expected to restart in early August. The restart time of Haike is short, and there is no pressure in inventory. Linggu has been shut down for 10 days. The downstream demand is weak, and the transaction is weak. Other factories have weaker transactions during this month and the inventory pressure is slow. It is expected that the overall inventory to be average.
3. Propylene Glycol Market Demand Situation Analysis
3.1 Downstream Demand Situation
In July, the main downstream of propylene glycol, unsaturated resin and polyether were still in the off-season. The influence of East China and South China policies was still large, production and sales were not smooth, and demand was shrinking.
3.2 Analysis of propylene glycol exports
According to customs statistics, in March 2018, the export volume of propylene glycol was 12,236.32 tons, the month to month export volume increased by 42.81%, and the monthly export volume increased by 34.65%; the cumulative total volume was 30,529.09 tons, an increase of 8.31%; the average export price of the month was 1,540.97 US dollars / ton. The month to month average price increased by 2.22%, and the average price increased by 28.1%.
Pic 5. Comparison of China’s propylene glycol export volume and price in 2016-2018
3.3 Analysis of downstream products
In July, Chinese domestic unsaturated resins were kept in stable operation. In this month, supported by the short-term high recovery of raw material styrene, the pressure of resin raw materials slowed down, the downstream follow up on demand, and the market trading atmosphere was stable. In the middle and late period, the main raw material market rebounded again and the overall raw material market rebounded. However, due to the downstream downturn demand atmosphere is shrinking, the mainstream resin companies maintained a stable shipment, and a few companies’ offers rose slightly. The overall trading atmosphere in the market was light during the month. The average operating rate of the unsaturated resin market in the month was around 45%, up 4.5% from the previous month. In August, the strong expectations of the main raw materials market still exist, but under the seasonal off-season, the improvement of the overall downstream follow-up situation is limited, the resin enterprises production are blocked, and the overall increase is limited. It is expected that the Chinese domestic unsaturated resin market in August may have a small increase; it is focusing on the specific trend of the main raw material market.
4 Propylene glycol price trend forecast
The supply of raw materials has increased, and the short-selling factor has increased. The contradiction between supply and demand of propylene glycol is still difficult. It is expected that the propylene glycol market will continue to narrow in the first half of August.
Looking separately:
In terms of supply: At present, Haike overhaul has stabilized production, and Depp will resume production after one month of maintenance. Shida will begin more than half a month to maintenance, and other devices have no planned schedule changes.
In terms of stock, there are many devices maintenance and repair in the month, production and sales progress in general, stable start-up enterprises have a certain inventory; follow-up import sources have more stable supplements, the impact on domestic supply still exists. On the whole, the supply of the medium and high-end market in August is still abundant; it is focusing on the subsequent changes in the impact of unregulated production and the utilization of the current idle capacity under the expected increase in the demand for dimethyl carbonate.
In terms of demand: In August, the terminal market in the middle and upper reaches is more difficult to improve. The support is not strong, and the export is still weak. The factory orders are limited, and the price is further down, and the foreign trade market is launched. The traditional peak seasons are coming, or they are getting better.
In terms of cost: Methanol: Due to environmental protection or routine maintenance, traditional downstream demand is difficult to improve in August, but the price in coastal areas remains high and the mainland is supported by the arbitrage window. Therefore, the mainland methanol market will continue to fluctuate in August. The Shandong area offer is around RMB2650-2800/ ton. Propylene oxide, there will be more production or increase in capacity next month, and new capacity is expected to exist. The supply is still abundant in the first half of the month; the demand side is slowly recovering, the downstream polyether plant resumes production and the propylene glycol plant restarts. It is also weak, and downstream demand just needs to be released slowly. In summary, it is expected that the market is likely to open lower in August.
Expected side: The supply of raw materials increased in the first half, the shorts were expected to be strong, and the downstream demand was also difficult to improve. It is expected that the propylene glycol market will continue to bottom out in the first half of August.
Reference Source: SCI99.COM