This month, the profitability of polypropylene from various sources has declined to varying degrees, mainly due to the relatively weak price of polypropylene and the firmer performance of raw materials. Due to the high price of thermal coal, the cost level of oil-made polypropylene is already lower than that of coal-made polypropylene, and the profitability of propylene-made polypropylene from external extraction continues to be negative.
In May, the gross profit of oil-made PP manufacturers continued to compress compared with the previous month. The average gross profit of oil-made PP this month was 1,589 yuan/ton, down 17.45% from the previous month. Oil prices fluctuated up this month. According to statistics from Zhuo Chuang Information, the monthly average price of crude oil was US$68.23 per barrel, an increase of 4.86% month-on-month, which caused the cost of oil-made polypropylene to rise simultaneously by 2.37%. The spot market price of PP fell after rising, and the ex-factory price fell 2.03% month-on-month. Oil-based PP prices have fallen but oil production costs have risen, so the gross profit margin of production companies has been compressed; compared with the same period last year, oil-based profits were 59.84%, mainly because crude oil was operating at an ultra-low level in the same period last year.
Looking at the next month, the oil market is expected to continue the trend of strong volatility, and the center of gravity will further rise. Pay special attention to the possibility of the two oils breaking through the previous high. Of course, as oil prices continue to run at a high level, there are signs that US crude oil production will increase, but it will take time to increase production, and the short-term impact on the oil market will be small. Therefore, demand continues to recover steadily, and on the supply side, whether it is Iran or the United States, it is difficult for crude oil production to substantially increase in the short term. Therefore, the turbulent trend in the oil market has not changed for the time being, and there is a strong support for the cost of polypropylene. The probability of oil price increases is high, but due to limited demand, the overall downward pressure on polypropylene prices in June will increase. Therefore, it is expected that the profit level of oil-made polypropylene may decrease, in the range of roughly 1300-1400 yuan/ton.
Post time: Jun-23-2021