October 09, 2024, The international oil market witnessed a robust surge post the National Day holiday, driven by escalating tensions in the Middle East. On the 7th, concerns over the intensifying conflict in the region propelled oil prices significantly higher, with both WTI and Brent crude closing up over 3%. Specifically, WTI settled at 77.14perbarrel,markinga3.7180.93 per barrel, up 3.69%. The focus now turns to the navigational status of the Strait of Hormuz, a crucial waterway for 20% of global oil exports. Iran’s potential response to Israeli attacks by targeting the strait has introduced a significant risk premium into oil prices, bolstering short-term price trends and lifting offer prices in the plastic spot market.
Furthermore, futures markets also embarked on an upward trajectory. On the 8th, PP and PE futures opened higher and continued to climb, with PP futures gaining over 2% and PE futures rising over 1%. The oscillating upward trend in futures markets further propelled offer prices in the plastic spot market. However, inventory dynamics in the petrochemical sector have shifted. As of October 8, plastic inventories held by the two major oil companies stood at 930,000 tons, up 270,000 tons from before the holiday, representing a 40.91% increase and a 12.73% year-on-year rise. This accumulation of inventories has exerted some pressure on plastic spot offer prices.
In terms of market offerings, plastic prices across various regions exhibited varying degrees of increases on the 8th. Linear mainstream prices were quoted between 8,420-8,900 yuan/ton, with prices in North China, East China, South China, and Southwest China all rising, with increases ranging from 140-300 yuan/ton. Additionally, LDPE and PP prices also rose, with LDPE prices surging significantly and PP prices reaching 7,700-7,950 yuan/ton.
According to insights from AsiaMB, the improving macroeconomic environment has also provided support for the plastic market’s upward trend. The Organization for Economic Cooperation and Development (OECD) recently released its latest economic outlook report, revising up the 2024 world economic growth forecast to 3.2% while maintaining the 2025 growth forecast at 3.2%. The report noted a continuous decline in global inflation levels and resilient economic growth. Furthermore, domestically, a series of incremental policies have been introduced to boost the economic environment, enhancing market confidence.
In summary, the surge in crude oil prices, the upward trend in futures markets, and the improving macroeconomic environment have collectively fueled the upward momentum in the plastic market. On the 8th, PP/PE prices rose by 150-600 yuan/ton. In the short term, with oil prices and optimistic market sentiment, PP and PE prices are expected to continue their upward trend.