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Plastic upstream raw materials continue to weaken

  • Categories:Industry news
  • Author:
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  • Time of issue:2013-11-19 02:14
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(Summary description)Therefore, the rapid flow of global ethylene sources ensures that prices in Asia fluctuate within a relatively stable range.

Plastic upstream raw materials continue to weaken

(Summary description)Therefore, the rapid flow of global ethylene sources ensures that prices in Asia fluctuate within a relatively stable range.

  • Categories:Industry news
  • Author:
  • Origin:
  • Time of issue:2013-11-19 02:14
  • Views:
Information

After the global financial crisis, the demand for ethylene chemical industry in the European and American markets has shrunk. In emerging market countries represented by China, the demand for refining has been increasing, and the global supply of ethylene has begun to accelerate to Asia. As the final upstream raw material for the production of plastics, crude oil prices have continued to weaken in the near future.

As of November 4, the closing price of the NYMEX crude oil January contract was 94.42 US dollars, falling to a new low since July. The denominated currency of crude oil, the US dollar, has gone out of the opposite direction, and the recurrence between the two shows a statistically inverse relationship.

Analysis of the reasons for the decline in oil prices, the direct trigger of the decline is the growth of crude oil inventories and the seasonal decline in domestic gasoline consumption, but the deepest motivation is dominated by financial attributes, namely, US monetary policy trends and the appreciation of the US dollar. According to the latest data, the US ISM manufacturing PMI rose by 56.4 in October, a record high in two and a half years, indicating that economic growth is expected to continue to improve.

With the support of various data, the signal of the US economic recovery has gradually become clear. Although the QE exit was not mentioned at the Federal Reserve interest rate meeting in October, the market has generally accepted a view that the final implementation is entering the countdown. As a result, the US dollar rebounded sharply after the October interest rate meeting. The US dollar index stood above the 80 mark last week. It has formed a mid-line uptrend in technology and is expected to continue to bear a negative pressure on crude oil prices. In contrast, the financial property dominates the trend of crude oil, and the price of plastics with fundamentals is positive. It is supported by commodity attributes. It is expected that the spread between the two will be expanded. There is a cross-market arbitrage opportunity. Consider buying a combination of crude oil and plastic.

Since July this year, the international ethylene price has risen by a wave, and reached the high turning point in the past year at the end of October. The ethylene in Southeast Asia is as high as US$1,470/ton, and in Northeast Asia, it is reaching US$1,425/ton. Looking back at the recent Asian ethylene price operation, it is generally within a large range, mainly because of the impact of external supply.

According to the production capacity estimation, China's ethylene self-sufficiency rate is very high, but the ethylene produced in the Middle East is mostly made of ethane, and the cost is low. Although the freight is expensive, its landed price is still better than that of domestic naphtha. Ethylene has a competitive advantage. Therefore, the impact of the external supply of vinyl on the Asian market has disrupted the balance between supply and demand in the region.

In recent years, the Asian ethylene market has maintained such a cyclical pattern: manufacturers with higher prices have increased their operating rates, while foreign-invested goods have concentrated on oversupply and prices have fallen over the over-supply, and foreign-invested imports have reduced supply and prices have risen again.

Therefore, the rapid flow of global ethylene sources ensures that prices in Asia fluctuate within a relatively stable range. At present, ethylene prices in Northeast Asia and Southeast Asia have touched the upper edge of this range, and there has been a certain degree of correction. It is expected that a new round of decline cycle is about to start. For spot companies holding ethylene stocks, they can choose to sell ethylene stocks and buy plastics futures to avoid the risk of inventory discounts.

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