At the beginning of September 2017, the plastic futures 1801 contract approached the high point of the year, rising as high as 10605 yuan / ton, and then it was mainly falling, the lowest pullback at the end of September to 9245 yuan / ton; in November, the oscillation rose, reaching a maximum of 10015 yuan / ton, and then fell back again. So, how will the market be interpreted in the future?
Crude oil broke through the year's highs
The escalation of tensions between Saudi Arabia and Lebanon and Iran has led to a surge in geopolitical risks in the Middle East. On November 9, WTI crude oil rushed up to $57.92 / barrel, refreshing the high point of the year. After crude oil hit a new high in the year, although the market cooled down and oil prices pulled back, there was no substantial bearish factor. On November 17, international crude oil prices rebounded again, and the future market is expected to remain volatile.
Ethylene monomer and polyethylene prices are inverted
The ethylene market is generally on the rise, and the increase is obvious, on November 20, the closing price of ethylene monomer was 1295 US dollars / ton CFR Northeast Asia, while the imported linear low-density polyethylene price was 1190 US dollars / ton CFR Far East main port, the average price difference between the two was about 105 US dollars / ton, showing an inverted phenomenon. Crude oil prices are oscillating, ethylene prices still have an upward trend, and this situation in which the price of "flour" is higher than the price of "bread" is estimated to be difficult to sustain, which is a potentially positive factor for polyethylene.
Spot is relatively firm
Affected by the sharp decline in natural rubber prices, the atmosphere of plastic futures and spot markets is bearish, and the price of the 1801 contract has declined. In terms of spot, PETROCHINA North China PE linear price reduction, high pressure part batch discount, Sinopec North China stability, CNPC Northeast high pressure and some low pressure price reduction, CNPC Northwest low pressure medium and short price increase, other stability. In short, the spot price fell less than the futures.
Downstream construction is at a high level
The seasonality of the downstream of plastics is more obvious, and in November after the "Golden Nine Silver Ten", the domestic agricultural film operating rate is still at a high level, and the daily output of enterprises is basically at the peak of the year. It is understood that the operating rate of agricultural film in Shandong is about 65%, up 3 percentage points from last week. In the peak season of agricultural film production, the enterprise started steadily, and the enterprises in Zibo Linzi stopped production resumed production, and the operating rate increased. The operating rate of agricultural film in East China is about 60%, which is basically flat compared with last week. Agricultural film enterprises order follow-up in general, large and medium-sized enterprises can start up, mainly white film and fruit film; small enterprises to small film or mulch film mainly, the production volume is slightly low. The operating rate of agricultural film in South China is about 50%, which is basically flat compared with last week. The demand for fruit film and breeding film in the southern region is acceptable, some large and medium-sized enterprises have a good start-up, and the production of small factories is flat, mainly ordinary white film.
In summary, the inversion of ethylene monomer and polyethylene prices is a potentially positive factor, and the future market may be corrected. Although the spot price of plastics has been corrected, it is relatively strong, and the possibility of a sharp decline in the future market is very small. The downstream operating rate is at the peak of the year, and manufacturers purchase on demand, which is positive for plastic prices. Looking forward to the future, plastics may be dominated by high oscillations, and if there is a certain degree of correction, it is an opportunity to go long on dips.
(Author Affilications:CPIC Xianrong Futures)
This article originated from Futures Daily
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