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China Market Reports 9 July 2017

Chinese Styrene Market Forecast

Sinopec Qilu Company plans to restart the styrene unit in early July. The two sets of styrene units at Yuhuang Chemical are scheduled to change catalysts in turn yet the detailed date is to be determined. Styrene producers largely maintain high operating loads attracted by high profits. Chinese-made styrene resources are expected to be stable-to-growing in July.

Most imports that will arrive in July will be offshore shiploads and only about 20kt of deep-sea shiploads will arrive. The styrene stocks at the main ports of East China will slowly accumulate in July.

The weak PS and EPS markets will fail to provide strong support. Players become cautious with styrene price reaching the current level.

On the whole, the styrene market will see wide-range ups and downs in July.

Chinese PE Market Forecast

Supply: The maintenance of PE units will gradually decrease in H2 of 2017. In July, the maintenance will be mainly concentrated in first half of month. The supply will gradually recover in H2 of the month with the maintenance finish. The
60kt/a FDPE unit at PetroChina Lanzhou Petrochemical keeps in maintenance. The 300kt/a LDPE unit at Inner Mongolia China Coal Mengda New Energy and Chemical Industry will continue the maintenance until July 15. The 940kt/a PE units at PetroChina Fushun Petrochemical will be maintained until July 15. The 470kt/a PE units at Sinopec Yangzi Petrochemical will start maintenance in succession in July, Hereinto, the HDPE A line is expected to restart on July 5, and the LLDPE unit is expected to restart on July 22. The 100kt/a LLDPE unit at Shenyang Chemical will be maintained for a week from July 18. Overall, the relative production decreases will be 82kt. The LLDPE materials takes up over 50% of the total decreases. What's even more concerning, is that the 450kt/a FDPE unit at Shenhua Ningxia Coal Industry Group is expected to be put into use in mid-July, and the first grade of production is 7042, so the LLDPE supply will increase somewhat. The import volume of PE in July is expected to increase. One reason is that the cargos from Iran will arrive at the ports in succession, another is that some foreign traders transfer their business to China because of the bearish market environment in Europe and the U.S.

Demand: In July, some high-end mulch film demand will gradually increase, pulling the number of orders and operating rates up. Thus, the demand for feedstock PE will enhance, which will support the PE prices somewhat.

Forecast: To conclude, the Chinese PE prices weren’t well driven in spite of the upward potential of crude futures. Many PE units will finish the maintenance in July, besides, some units will be put into use. Thus, the supply volume is expected to increase. To speak from experience, the shed plastic film industries will purchase more LLDPE and LDPE in July, which may uplift the spot prices. In terms of other industries, the downstream demand in Q3 is unlikely to boom distinctly. Therefore, a cautious attitude should be held towards the market.

Chinese Methanol Market Forecast

In the inland areas, after continuous drops, the methanol prices declined to a low level. Meanwhile, recent coal price gains provided some cost support. Thus, the bearish sentiment weakened somewhat. At the end of June, the methanol sales in the major producing areas improved on the short-covering demand. It is predicted that the prices may rise tentatively in early July. However, the newly-added methanol units in Shandong are expected to go into operation in July, while the traditional downstream demand can hardly improve. Thus, the market may still face downward pressure in late July. The prices may be in the range of RMB 2,050-2,250/mt in Shandong and RMB 1,800-1,950/mt in Inner Mongolia.

In the coastal areas, although the methanol futures prices still have upward momentum and the merchantable resources are in shortage, most players are cautious and puzzled about the following market trend. Imported methanol will arrive intensively from end-June to early July, while the demand remains soft. Meanwhile, the newly-added methanol units in the inland areas are expected to go into operation. the methanol market in the coastal areas will be rangebound in the near term, and RMB 2,330-2,400/mt will be a support level.

Jul 9, 2017 10:08
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