Yesterday, the PP2005 contract surged 7.32%, but it ended up with a 0.86% decline! After many days of "crazy", the market tended to calm down. Looking back at this wave of “leading spot” rising prices: the raw material melt-blown fabric for mask production rose 20 times in 2 months, PP fiber rose 4 times in 2 weeks, and PP wire drawing rose 50% in 2 weeks. It is worth mentioning that, compared to the chaotic quotes in the spot market, the futures price fluctuations are relatively rational, and the role of financial derivative risk management is reflected. Yesterday, the price of PP futures "closing overcast" means that this "crazy" is coming to an end?
Spot drives strong futures
With the stabilization of crude oil prices and the impact of increased mask demand during the epidemic stage, the spot price of polypropylene (PP) has risen 41% since April (as of April 14), and the settlement price of PP futures contracts in 2005 has risen by 32% over the same period, and the basis from At the beginning of the month, 100 yuan / ton expanded to about 600 yuan / ton, showing a gradual expansion trend, and PP futures trading volume and open positions have also been enlarged to varying degrees over the same period of previous years, and contracts are obviously more active than previous years. Compared with the chaotic quotations in the spot market, the futures price fluctuations are relatively rational, and the role of derivative risk management is reflected.
It can be observed from the futures board that since April, the settlement price of the PP2005 contract has increased from 5727 yuan / ton to 8099 yuan / ton on April 14, an increase of 41.42%.
In an interview with the Futures Daily reporter, Longzhong Information polypropylene team said that it is not difficult to see that this wave of market prices is the rise of the spot market, which has driven the futures up. The recent rise in PP spot prices has gone through several stages:
April 6-7, from 6400 yuan / ton to 6750 yuan / ton, after the Qingming Festival PP futures were driven higher by the increase in fiber material prices, and petrochemical companies subsequently raised their ex-factory prices; April 9-April On the 12th, from 6800 yuan / ton to 7500 yuan / ton, domestic PP production companies have switched to fiber production. The supply of PP2005 contract delivery period is tight, and the spot price is higher. From April 12th to April 13th, the price of PP drawing The rise of 7500 yuan / ton quickly rose to above 9000 yuan / ton. Some T30S prices even exceeded 10,000 yuan per ton. The supply of wire drawing continued to be tight. After the opening of Monday, the futures daily limit and spot prices continued to rise.
In this regard, Zhang Jun, an analyst at Zhongda Futures, explained that the kinetic energy for the previous rise mainly came from the sharp rebound in upstream crude oil prices. After the breakdown of the OPEC + production reduction meeting in March, against the backdrop of the crude oil “price war” between Saudi Arabia and Russia, international oil prices fell all the way, causing the domestic chemical market to be “sorrowful”. But at the beginning of the month, the oil-producing countries represented by Saudi Arabia, Russia and the United States expressed their willingness to jointly reduce production and hoped to hold another meeting, which quickly reversed the pessimistic expectations of the market. Price trend.
After the Qingming Festival, stimulated by the end demand, the domestic market supply of fiber materials was in short supply. The price of fiber materials rose all the way, driving the upstream petrochemical plants to increase the rate of fiber material output, thus squeezing out the standard products: the production and supply of wire drawing materials. Eventually, the spot of fiber material and drawing material rose together. "Driven by rising spot prices, PP futures prices accelerated after the Qingming Festival." Zhang Jun said.
The Futures Daily reporter learned that the PP futures trading target is drawing grade PP, while the raw materials of the mask meltblown fabric and outer nonwoven fabric are fiber grade PP. The two are two different types of polypropylene downstream products, and many polypropylene production Enterprises can switch production capacity between the two. Recently, some production companies have converted the production of wire-drawing grade PP into more profitable fiber-grade PP, which has affected the price of wire-drawing products. In fact, a disposable medical mask with sufficient materials only needs 2-3g of non-woven fabric and melt-blown material. The daily consumption of PP for 100 million masks is about 200-300 tons. The industry is fully capable of guaranteeing the supply of mask raw materials.
Affected by the COVID-19 epidemic, the demand for masks at home and abroad has been increasing since the beginning of the year. Manufacturers of masks and related raw materials (non-woven fabrics, melt-blown fabrics, etc.) have sprung up. As the main raw material of non-woven fabrics and melt-blown fabrics, the demand for PP fiber materials has increased dramatically, and the spot prices have continued to rise. Driven by profits, upstream petrochemical companies are more inclined to arrange production of fiber materials. Mask production usually requires non-woven fabric (common fiber material) + meltblown layer (high melt refers to special fiber material). Due to the international outbreak, more than 90% of the masks in the world come from China, and the demand for masks has greatly increased.
During the investigation, the reporter found that in Jiangsu and Zhejiang, for example, the number of mask manufacturing enterprises increased from dozens to thousands in a short period of time, resulting in a huge supply and demand gap in raw materials, resulting in a sharp increase in the price of fiber materials. For example, the raw material for non-woven fabrics increased from 12,000 yuan / ton to 100,000 yuan / ton, and the melt-blown materials increased from 20,000 yuan / ton to 500,000 yuan / ton. Due to the difficulty of expanding production of melt-blown materials in the short term, driven by high profits, some companies even use ordinary non-woven fabric materials as unqualified masks for the production of melt-blown layers. The contradiction between supply and demand of raw materials and drawing materials.
According to the statistics of Zhuo Chuang Information, as of April 14th, the domestic petrochemical enterprises' PP fiber material production ratio has increased from less than 7% at the beginning of the month to 44.9%, far exceeding the production ratio of PP wire drawing materials (standard products for futures delivery). The average production ratio of wire drawing in 2019 is 33.5%, and the domestic production ratio of PP wire drawing has dropped to 12.5% as of April 14.
"In the short term, the rapid imbalance of the PP supply pattern, coupled with downstream traders and consumer companies scrambling for goods under the concern of rising prices, has finally formed a situation in which the spot price of PP has recently risen sharply," an industry source said.
The gap of brushing is gradually enlarged
It is reported that the production of masks has driven the demand for melt-blown fabrics to rise. Many companies have switched from the production of wire-drawing materials to melt-blown materials or even fiber materials, and the wire-drawing output has dropped significantly. So, what is the supply and demand situation of the real mask meltblown cloth, what is the gap between the supply and demand of the wire drawing, is the current price reasonable?
During the interview, the reporter learned that the mask industry chain showed an hourglass shape in the early stage, that is, the upstream polypropylene fiber material production capacity was sufficient, and the mask production capacity gradually burst, but the midstream melt-blown cloth production capacity has a bottleneck. Therefore, even if the demand for masks has increased significantly, the impact on the price has only been transmitted to the melt-blown fabric link, and has not continued to be transmitted to the upstream polypropylene fiber material.
"The epidemic situation in February and early March has not yet spread overseas, and domestic masks have gradually eased from the supply shortage. The demand for masks accounted for less PP consumption, and the price of melt-blown cloth has experienced a After the round of soaring, it returned to a low level. "Zhou Ao, an analyst at Everbright Futures, said that the situation changed again after entering the middle and late March. Due to the large-scale outbreaks of overseas epidemics, the export demand for defense epidemic materials in our country has surged, and the domestic prevention and control work has not ended, which has led to a new round of outbreaks in mask demand. However, the bottleneck of the meltblown cloth production capacity at this time has not been resolved, and the meltblown cloth price has once again returned to a skyrocketing trend.
"At this time, under the temptation of profiteering, many criminals began to intervene. They began to use other types of fiber materials or even polypropylene without obtaining polypropylene meltblown materials or professional meltblown cloth production equipment. Wire drawing materials and very simple meltblown equipment produce so-called meltblown cloth. "Zhou Ao said.
From the perspective of demand, affected by the epidemic, non-woven fabrics, melt-blown materials, and lunch box packaging boxes have caused the rapid growth of total demand for fiber polypropylene in the short term, and there is an atmosphere of hype caused by the epidemic. In the past years, the total demand for fiber-grade polypropylene was about 10,000 tons per day. This year's survey shows 23,000 to 30,000 tons per day, with an average monthly average of 600,000 to 700,000 tons. In addition, all parties in the market are currently hoarding materials, and the manufacturer locks in usage for 2 months, resulting in a surge in demand. Ordinary fiber pellets have risen to 20,000 yuan / ton, and non-woven fabrics are sold for 100,000 yuan / ton. The selling price of melt-blown cloth is about 500,000 yuan / ton, and the profits of all links in the industrial chain are relatively high.
From the perspective of supply, the output of fiber-based polypropylene was about 160,000 tons in previous years. Driven by the high profitability of fiber-grade polypropylene downstream, some polypropylene companies have shifted their production capacity from wire-drawing to fiber-grade. The current monthly output is about 500,000-570,000 tons. With the increase in the operating rate of enterprises, the output of fiber-grade polypropylene is expected to increase to 700,000 tons per month, and the overall supply will be sufficient in the future.
The latest data from Zhuochuang shows that the production capacity of fiber materials has reached 12.51 million tons, and the production scheduling ratio is 48.75%, far exceeding the level before the outbreak (the production scheduling rate before the outbreak is 10%). With the large increase in fiber output rate, the output rate of wire drawing, homopolymer injection and BOPP film decreased significantly, especially the wire drawing dropped to less than 16%, far below the normal level of about 30%, a record low.
"In the past years, the demand for wire-drawing grade polypropylene was about 700,000 tons, which was down by 5% this year due to the epidemic situation. From the supply point of view, since April, due to the demand for masks, wire-drawing grade polypropylene production enterprises have converted to fiber-grade polypropylene, resulting in the drawing grade polymer Propylene production plummeted. In early 2020, the production capacity of drawing grade polypropylene and fiber grade polypropylene accounted for 39% and 6%, respectively. Recently (April 10), the drawing grade dropped sharply to 21%, and the proportion of fiber grade production capacity rose to 26%. Affected by this, the output of drawing grade polypropylene decreased from 660,000 tons in early January to 460,000 tons in April. Imports remained at 50,000 tons, and the total supply was only about 500,000 tons. "Zhou Ao said.
"At present, the total domestic polypropylene production capacity is 25.66 million tons, and the domestic daily production of PP fiber materials has reached 2566 0.4875 0.9 / 365 = 30,800 tons (the device operating rate is calculated at 90%), which has far exceeded the demand for production masks. In the short term, the substantial release of PP fiber material supply in the short term may cause a risk of excess in the future. "Zhou Ao said.
Rational view of price return
China is a large non-woven fabric producer. In 2018, the national non-woven fabric output was about 3.939 million tons, and the melt-blown fabric output was only about 53.500 tons. Cloth output can basically meet the needs of mask production. Due to the epidemic in 2020, the demand and output of masks have soared. As of March, the national daily output of masks has exceeded 100 million.
"Due to the limitation of investment and equipment construction period, the supply of meltblown cloth as a key raw material for masks is difficult to quickly follow up, resulting in a shortage in the current meltblown cloth market." Zhang Jun said that due to the squeeze of fiber material, the drawing material is petrochemical The proportion of scheduled production fell sharply. In the current situation where demand is generally stable, the sharp decline in supply in the short term has formed a strong support for the spot price of drawing materials.
As of April 14, the mainstream drawing in North China was 8,700-9,100 yuan / ton, the mainstream in East China was 8,500-9,100 yuan / ton, and the mainstream in South China was 8,700-9,500 yuan / ton. "The substantial discount on the futures market reflects the market's general expectation that the short-term supply of wire drawing will remain tight, but with the gradual surplus of fiber materials, the supply of wire drawing returns to normal levels, new production capacity continues to release supply increases, PP Factors such as high raw material prices are forcing downstream companies to lower their negative burdens and other factors. The weakening of long-term prices is a high probability event. "Said Zhou Ao, an analyst at Everbright Futures.
It should be noted that the reporter learned from relevant channels that part of the current strong demand for fiber materials is due to the production of numerous illegal meltblown fabrics and masks, which poses a greater risk. After the price of PP fiber material surges, the centralized conversion of fiber materials by many petrochemical companies is bound to cause an oversupply in the market.
In response to the recent phenomenon of high prices of high-melt index fiber materials in the market, the Futures Daily reporter learned that on April 13th, the Central Committee responded to the new coronary pneumonia epidemic leadership group meeting and said that strict medical product export quality supervision, according to law investigation and handling Qualification and standard production, coaxing up prices of epidemic prevention products and raw materials, etc. On the same day, it was reported that the "two barrels of oil" also issued an order. High-melt refers to the fiber temporarily canceling the intermediate trade billing link, and the sales branch directly docks with the end customer, and sets a maximum sales limit price of 11,500 yuan / ton. In order to increase the market, the intention is to control the atmosphere of spot speculation from the source and make the supply chain transparent. In the opinion of the industry, "de-trade" means that the refining and chemical enterprises provide a complete one-stop service from production to supply to distribution, and realize a more transparent supply mode.
In addition, industry insiders also mentioned that a large number of imported PP sources are hitting the domestic market. If prices continue to rise, high prices will prompt many imported products to enter the domestic market and improve the supply and demand relationship. The first batch of meltblown cloth production lines of Sinopec and PetroChina went into operation in early March. Recently, two more Yanshan Petrochemical and Yizheng chemical fiber meltblown cloth production lines were put into operation, which will further make up for the supply gap.
"The market believes that the high price situation in the spot market is difficult to maintain for a long time, so the futures prices are mainly follow-up, and they still play the role of price discovery while experiencing significant market fluctuations." Zhang Jun said.
According to analysis by relevant market participants, there is an obvious law of near-strong and far-weak in the PP futures market. Affected by the short-term boost in crude oil prices and the rising demand for masks, the contract settlement price in recent months of 2005 has increased by 41.42% in April to 8099 yuan / ton; while the main contract in 2009 rose by 18% to 6869 yuan / ton. The increase and absolute price of contracts in recent months are higher than those in far-month contracts, which is a good reflection of the judgment that the PP spot market is "realistically strong and weakly expected", and the forward price will eventually fall.
At the same time, since April, the spot price of PP (the sales price of Shenhua Coal-based East China) has risen from 6050 yuan / ton to 8500 yuan / ton on April 14, an increase of 41%. In particular, spot prices rose sharply on the weekends of April 11th and 12th, driving up prices after the goods opened on the 13th. Compared with the large fluctuations in spot quotations, the futures price fluctuations are kept in a relatively reasonable range, and the price discovery function is effectively played, which provides space for corporate hedging.
After the close on the 14th, Dashang issued a notice that the PP futures price limit was adjusted to 9%, and the margin levels for hedging and speculative trading were adjusted to 9% and 11%, respectively. This move aims to provide appropriate liquidity, ensure smooth operation during market fluctuations, and better play the function of futures.
It is worth mentioning that on April 14, PP futures prices showed a downward trend. As of the close, the closing price of the PP2005 contract fell 0.86% from yesterday, while the main 2009 contract fell 5.86%. With the delivery month approaching, the PP2005 contract has begun to accelerate the reduction of positions, and this round of rising prices may be nearing the end.
Relevant market participants urged that all parties should rationally view the recent PP price fluctuations and reasonably carry out business operations and investment. Moreover, Sinopec and PetroChina meltblown fabric production lines have been put into production one after another. The gap between supply and demand is expected to alleviate soon, and the long-term price will return. The above-mentioned personages also pointed out that the price signals and hedging functions of the futures market have been effectively played, and have become an effective tool for enterprises to manage price risks and support the production of anti-epidemic materials.
