In April, the gross profit of PP Plastic Granules produced by different process routes in China mostly increased, among which the mainstream oil based, coal based, and PDH based PP saw varying degrees of increase in gross profit. Despite the relatively high prices of raw materials such as crude oil and propane, the overall PP spot price fluctuated at a high level in April, supported by tight market supply. The monthly average price increased by more than 10% month on month, driving a significant recovery in the gross profit of mainstream process PP. Among them, the gross profit of oil-based PP increased by 80.10% month on month, becoming the process route with the highest gross profit growth in April.
In April, the gross profit loss of oil to Polypropylene production enterprises decreased, with an average gross profit of -170.15 yuan/ton, an increase of 684.93 yuan/ton month on month, and an increase of 80.10%. Brent crude oil has increased month on month. According to data statistics, the monthly average price of Brent crude oil is $100.43/barrel, and the average cost of oil to PP production is 9513.99 yuan/ton, an increase of 209.40 yuan/ton or 2.25% month on month. During the month, the average price of oil to PP was 9343.84 yuan/ton, an increase of 894.32 yuan/ton or 10.58% compared to the previous month. The cost increase of oil-based PP is not as significant as the price increase, resulting in a decrease in gross profit losses for oil-based PP production enterprises.
The gross profit loss of oil-based Polypropylene in May may continue to decrease. At present, the Strait of Hormuz is still in a semi closed state with low traffic efficiency, and the United States has strict restrictions on Iran's oil exports, so the spot market is relatively scarce. Although Trump has been announcing smooth negotiations and constantly calming the market, from Iran's feedback, the differences between the two sides still exist, and the market is likely to have fluctuations, so oil prices continue to fluctuate. Overall, it is expected that the oil market prices will show a high and wide range of fluctuations, with a slight downward shift in the center of gravity. The cost of oil based Polypropylene may slightly decrease, but due to concentrated maintenance and significant supply side support, the price of PP is still supported. It is expected that the gross profit of oil based PP may slightly improve.
In April, the gross profit of coal to PP production enterprises increased, with an average gross profit of 2652.48 yuan/ton, an increase of 761.88 yuan/ton or 40.30% compared to the previous month. Thermal coal slightly increased compared to the previous month, and the average cost of coal to PP production was 6503.75 yuan/ton, an increase of 82.89 yuan/ton or 1.29% compared to March; The average price of coal made PP was 9156.23 yuan/ton, an increase of 844.77 yuan/ton or 10.16% compared to the previous period. The price increase of coal made PP was greater than the cost increase, resulting in an increase in gross profit of coal made PP.
The gross profit fluctuation of coal to PP Resin is expected to be limited in May. In May, downstream users will gradually release their demand for pre summer stocking to meet peak demand. Considering the current lower inventory levels of some power plants compared to the same period in previous years, the possibility of early high temperatures, and the limited cost-effectiveness advantage of imported coal, it is expected that downstream stocking procurement demand will significantly enhance market support and drive up coal prices. The cost support of coal to PP may be strengthened, but considering the strong support of PP prices, the gross profit of coal to PP is expected to remain stable with little change.
The gross profit of methanol to PP Granules production from external sources decreased month on month in April. The average gross profit of external methanol to PP production was 260.42 yuan/ton, a decrease of 365.57 yuan/ton compared to the previous period. The average price of methanol in April was 2632.92 yuan/ton, with a month on month increase of 435.15 yuan/ton, an increase of 19.80%. This led to a month on month increase of 1157.13 yuan/ton, an increase of 15.04%, in the cost of methanol to PP production. In April, the price of methanol to PP increased, with a month on month increase of 890.08 yuan/ton, an increase of 10.70%. The price increase of methanol to PP is not as significant as the cost increase of methanol to PP, resulting in a month on month decline in gross profit from external procurement of methanol to PP.
Looking at May, it is expected that the gross profit of external methanol to PP production may increase slightly. In May, the domestic methanol market may maintain an overall supply-demand balance, and the focus of transactions may be mainly on box oscillation. The import supply continues to shrink and there is a strong expectation of negative feedback from downstream products. Coupled with the inherent "spring inspection" plan of upstream and downstream factories in May, there is a multiple game of mentality and fundamentals. Overall, it is expected that the cost change of external methanol to PP production will be limited. Considering that PP price support is still relatively strong, gross profit may still increase slightly.
In April, the gross profit loss of PDH PP production enterprises decreased. The average gross profit of PDH PP was -1523.11 yuan/ton, an increase of 700.63 yuan/ton from the previous month, with a growth rate of 31.51%. The average cost of PDH PP production was 10845.64 yuan/ton, an increase of 220.14 yuan/ton or 2.07% compared to the previous period; The average price of PDH made PP was 9322.52 yuan/ton, an increase of 920.76 yuan/ton or 10.96% month on month. The price increase of PDH made PP was greater than the cost increase, resulting in a decrease in gross profit loss of PDH made PP.
It is expected that the gross profit loss of PDH PP will narrow in May. The import cost of propane in May remains high, and due to the impact of the Middle East situation, the amount of imported resources arriving at the port will also remain at a low level. Low supply remains an important supporting factor in the market. However, downstream demand is also expected to decline, and the PDH operating rate has dropped to a low level. The rise in temperature will also suppress the demand for combustion, and the market lacks sustained upward momentum. It is expected that the cost of PDH production of PP may slightly increase, and the supply of PP may be tight with high prices, resulting in a decrease in the extent of enterprise losses.
In April, the gross profit of PP production from external propylene procurement decreased, with an average profit level of -618.96 yuan/ton for the month, a month on month decrease of 88.39 yuan/ton, or 16.66%. The cost of producing PP from imported propylene in April increased by 942.02 yuan/ton compared to the previous month. The price of PP produced from imported propylene increased by 933.49 yuan/ton month on month. In absolute terms, the increase in cost of producing PP from imported propylene is greater than the increase in price of PP from imported propylene, resulting in an increase in gross profit loss.
The gross profit loss of PP production from imported propylene in May is expected to further expand. In May, there is still some support for the cost and supply side of the propylene market, and the overall demand side is stable but weakening. The propylene market is expected to have a supply-demand game, and there is a high probability of price fluctuations at a high level. Therefore, the cost of producing PP from imported propylene may still be high, and it is expected that the company's gross profit will suffer losses or expand.
Overall, it is expected that the gross profit of multi process PP in May will show a trend of first increasing and then decreasing. The current geopolitical situation still remains uncertain, with significant fluctuations on the cost side. The impact of geopolitical disturbances on the market is still ongoing, but over time, the market's response to news may gradually weaken. At the fundamental level, constrained by tight supply of raw materials, the pattern of industry equipment start-up and overall tight supply of goods will continue to support PP prices, driving a temporary increase in gross profit; As the shortage of raw materials gradually eases in the future, the industry's operating rate is expected to steadily rise, and the focus of PP prices may fall accordingly. The gross profit of PP in various process paths will also be under pressure and narrowed.