Polypropylene, polyethylene will build the perfect arbitrage portfolio

As China and the world 's second largest synthetic resin , polypropylene production in recent years has exceeded polyethylene, polyvinyl chloride behind . According to estimates data show that in 2013 China 's output of 11 million tons of polyethylene , polypropylene production is about 12.5 million tons . On the Chinese domestic terms , from the perspective of the upstream raw material , polypropylene and polyethylene closer , are mainly from naphtha cracking olefins and then directly synthesized products , factors and price fluctuations were also similar between the two .Sellotape


From the domestic supply situation, polypropylene imports accounted for about 30 %, while imports accounted for 40% of polyethylene , polypropylene import dependence is relatively low , mainly because domestic coal chemical industry in the field of polypropylene a higher proportion of last year, coal-to- polypropylene ( PP including methanol ) yields about 10 % of domestic production, while coal- polyethylene ( including methanol polyethylene) accounted for only 3% , which visible, the development of coal chemical industry for greater impact polypropylene prices .Washi tape


Demand from the domestic point of view, the DCE program listing is drawing level polypropylene , which are polypropylene homopolymers, polypropylene entire share of consumption accounted for about 40% , mainly concentrated in the downstream consumption of cement bags , chemicals bags, woven bags and other manufacturing enterprises , such enterprises to participate threshold is not high , which determines its smaller and more dispersed with the characteristics of linear low density polyethylene which demand characteristics of enterprises more similar . Therefore , limited scale , drawing polypropylene consumption of the production profits are usually relatively thin , it is more sensitive to fluctuations in raw material prices, low inventory operation is the main strategy.Masking tape


For industrial chain customers, whether it is upstream producers , traders or downstream intermediate consumption of enterprises , their prices fluctuate for polypropylene has a strong demand for hedging . Intermediate traders , for example, will operate without exception, while polyethylene traders selling polypropylene , polypropylene prices when the volatility of the situation , they are difficult to find the right way to avoid risks , some businesses will participate in electronic trading result of the transaction , but the geographical limitations and liquidity risk aversion led to fluctuations in the price is not ideal. In addition, in the case in recent years, coal- accelerating pace of expansion of polypropylene , polypropylene upstream companies listed futures will provide tools to circumvent product prices , thereby locking the production profits. From the perspective of downstream processing enterprises , due to their own profits thin, raw material price fluctuations will greatly affect the development of enterprises, listed polypropylene futures offer the possibility of low-cost procurement of raw materials for these low-profit enterprises , thus contributing to such enterprises bigger and stronger. Thus , polypropylene futures will be listed on different segments of the industry chain customers avoid the risk of price fluctuations , thus ensuring the normal operation of enterprises .Wholesale masking tape