"Weekly Market Analysis" Polyolefin PP/PE (10.25-10.31)

Polyolefin market analysis

-Refer to this week-

10

On October 19, at the yulin fourth quarter coal supply special conference, the market coal price in the main coal-producing areas of Jinshan and Mongolia was required to be reduced by 100 yuan / ton on the existing basis. At the meeting, Zhang Shengli, mayor of Yulin City, proposed that all state-owned enterprises in Yu take the lead in reducing prices by 100 yuan / ton, and the price of enterprises that have signed a long-term guarantee shall not exceed 1200 yuan / ton, and private enterprises shall not exceed 1500 yuan / ton.

On the evening of the same day, the National Development and Reform Commission issued three articles in a row to pay attention to the issue of coal supply and price stability, implemented intervention measures on coal prices, and played a heavy "combination fist". On the same day and night, the full contract of moving coal was sealed off, and thermal coal fell for three consecutive days, driving the bullish atmosphere in the commodity market to be greatly cold. Including the large increase in the early stage, methanol, ethylene glycol, PVC and other coal chemical related chemical varieties have recently declined significantly. After the National Day, the trend is dominated by flat polyolefins, which also fell below the support, and the price went down a step. On October 22, the price of PP and PE fell below 9,000.

Polyolefins are relatively strong compared to other chemical varieties, and the futures disk rebounded again after a short-term rebound, and the basis trend of PE and PP diverged. Since PP domestic production accounts for a relatively large proportion, and coal chemical devices account for more than PE, coal prices and PP have a greater correlation. The price of coal fell this time, and the price of PP fell more than PE. In addition, the import data in September was released, and the PE import data decreased month-on-month, providing the basis for the strengthening of the L-P spread to a certain extent. It is expected that there will be a period of L strong P weak trend in the medium term. You can pay attention to the arbitrage combination of long LL and short PP.

The PE basis has not changed much this week, around 0-100; pp basis has weakened significantly, mostly at -150 to -70. PE spot is relatively strong, providing support for basis. However, PP spot performance was poor, weakening to the negative basis range. The short-term session is expected to remain weak. Polyolefins are weak, and prices have entered a technical shock downward; PP short-term support is at the 8800 line, and PE is near 8900.