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On March 5, Premier Li Keqiang made a government work report on behalf of the State Council to the Second Session of the 13th National People's Congress. When talking about the government's work in 2019, Li Keqiang announced: lowering the enterprise VAT rate, reducing the current 16% tax rate in the manufacturing industry to 13%; cleaning up the electricity price additional charges, reducing the cost of manufacturing electricity, and the average industrial and commercial electricity price. Reduce by 10%.
In the whole year, the burden of corporate taxation and social security contributions was reduced by 2 trillion yuan, and the tax reduction and fee reduction was unprecedented. As part of the manufacturing industry, the plastic products industry will also benefit. It can be said that tax reduction and fee reduction will inject new development momentum into the plastic products industry, which will inevitably drive the industry to develop in a better direction.
While enjoying the benefits of the policy, the fundamentals of the plastic market are gradually improving.
Crude oil will remain volatile
Affected by OPEC member states and Russia's non-OPEC production reduction agreement and the expected improvement in Sino-US trade negotiations and the slowdown in global economic growth, the recent international oil price shock consolidation, but from the trend point of view, the upward trend of oil prices has not changed. As of March 4, WTI crude oil main contract closing price of 56.59 US dollars / barrel. In the past 14 trading days, WTI crude oil has risen in 12 trading days and has risen 25% this year.
In December 2018, OPEC reached an agreement with non-OPEC that participated in the production reduction. Starting from January 1, 2019, a new round of production reduction will be implemented on the basis of the daily output of crude oil in October 2018 (some member states are September or November). OPEC's overall daily production is reduced by 800,000 barrels, and non-OPEC, which participates in production cuts, reduces the daily output of crude oil by 400,000 barrels. The total daily output was reduced by 1.2 million barrels, and the production reduction agreement period was 6 months. Among them, OPEC members Libya, Iran and Venezuela did not participate in the production reduction agreement, and Qatar withdrew from OPEC. In February, the daily output of OPEC crude oil decreased by 560,000 barrels per day compared with the daily output of crude oil in January. Russia's crude oil output in February was 11.34 million barrels per day, a slight decrease of 0.35% from January. Russia’s oil production in February was about 75,000 barrels lower than last October’s production base, far below the daily target of 228,000 barrels reduced in the OPEC-led production reduction agreement reached at the end of last year. However, the Russian Energy Minister said recently that Russia plans to accelerate the reduction of crude oil production in March and will achieve the goal of reducing production in the first quarter. The output of crude oil from OPEC and non-OPEC member countries has declined, while the slowdown in US oil production efficiency will continue to support oil prices in the future.
The supply and demand side improved. The petrochemical price opened up and began to increase.
According to the data monitored by the Chemical Research Institute, as of March 4, except for the lower operating rate of PEPE in the downstream of PE, the operating rate of agricultural film, packaging and hollow products has reached 50-55%, and PP started downstream. The rate has rebounded to 55-60%. As the downstream operating rate increased, petrochemical inventories fell rapidly. As of March 4, domestic petrochemical polyolefin stocks fell by 19.6% from the highest point of the year.
As the inventory declines, the petrochemical pressure has eased. At the same time, the petrochemical plant will be counted in the maintenance period starting in March. March-June is the centralized maintenance period of domestic petrochemical plants, involving Tianjin Union, Zhongsha Tianjin, Yanshan Petrochemical, Shenhua Ning Coal, Maoming Petrochemical, Guangzhou Petrochemical, etc. The maintenance capacity involved is 5.91 million tons, and the loss caused by overhaul It is estimated to be 645,000 tons. Petrochemical inventory pressure will be greatly eased, and price increases are also inevitable. According to the monitoring data of the Chemical Research Institute, on March 5, the price of petrochemical PE increased by 50-100 yuan/ton, and the PP increased by 50-150 yuan/ton. Petrochemical prices are expected to continue to rise as demand improves and petrochemical inventories continue to fall.
Dongfeng gradually goes to the market to warm up futures prophets
The crude oil market and supply and demand continued to improve, and the futures market took the lead. As of March 5, PP futures 1905 contract closing price of 8895, compared with February 28 closing price of 8657 rose 238, or 2.7%; PE futures 1905 contract closing price of 8720, compared with February 28 closing price of 8580, 140, an increase of 1.6 %.
Taking PP futures as an example, on March 1 and 4, PP Masukura increased its volume, and the technical indicators of the K-line and weekly K-line continued to improve, and the short-term existence may continue. However, the current price has touched the upper track of the Bollinger Band, and it is also the upper edge of the finishing platform. There is a certain pressure in the position of 9000-9060. If the price breaks through, it will open up the upside.
In summary, due to favorable policies and rising crude oil/futures and petrochemicals, the plastics market is expected to continue to improve.
Founded in 2008, Lu'an Qingsong Masterbatch Co., Ltd. specializes in the production of non-woven masterbatch, polypropylene masterbatch and other materials for spinning, drawing, BCF and other PP masterbatch, and also produces various environmentally friendly colors. Masterbatch, functional masterbatch, blown film masterbatch, injection masterbatch, engineering plastic modified masterbatch and reinforcing masterbatch.