From the situation in the first half of the year, the mainstream products of recycled PP are mostly in a profitable state, but they are mostly operating at a low profit, fluctuating in the range of 100-300 yuan/ton. In the context of unsatisfactory follow-up of effective demand, for recycled PP enterprises, although profits are meager, they can rely on shipment volume to maintain operations.
The average profit of mainstream recycled PP products in the first half of 2024 was 238 yuan/ton, a year-on-year increase of 8.18%. From the year-on-year changes in the above chart, it can be seen that the profit of mainstream recycled PP products in the first half of 2024 has improved compared to the first half of 2023, mainly due to the rapid decline in the pellet market at the beginning of last year. However, the supply of raw materials in winter is not loose, and the cost price decline is limited, which has squeezed the profit of pellets. Entering 2024, downstream demand will continue the weak trend of last year, with limited improvement in order follow-up. The strong expectation mentality of operators has eased, and operations tend to be conservative. They usually choose to flexibly adjust production, focusing on shipment volume while ensuring gross profit.
Looking at the first half of the year, most downstream manufacturers of recycled PP did not release new orders quickly, with urgent needs for replenishment and slightly lower operating rates compared to previous years. Traditional industries such as plastic weaving and injection molding had operating rates of less than 50%, resulting in poor demand performance and a lack of enthusiasm for purchasing recycled materials. In the second half of the year, the domestic economy may continue its structural recovery, but the real demand momentum downstream remains to be seen, and there is a high probability of cautious purchasing sentiment, which is unlikely to provide a strong boost to the market.
From a supply side perspective, recycling manufacturers may continue to maintain a flexible attitude towards operation and try to minimize the negative impact of oversupply on the market. Simply put, in the pursuit of relative balance between supply and demand, the incremental increase on the supply side is more limited compared to demand, which provides certain support for prices. In addition, the supply of upstream raw materials is not loose, and in the short term, there may be hoarding operations. With the arrival of the "Golden September and Silver October" peak season in the second half of the year, there may be room for price increases, which provides strong support for the offer of recycled PP particles. However, it should be noted that while the market is rising, the increase in raw material procurement costs is usually equal to or even slightly greater than the increase in particle prices; During the period of market decline, raw materials are supported by a shortage of goods, and the decline is usually slightly smaller than the decline in particle prices. Therefore, in the second half of the year, it may be difficult for mainstream recycled PP products to break the situation of low profit operation.
Overall, due to flexible supply control and the possibility of oversupply, the price resilience of recycled PP products has increased with limited fluctuations. It is expected that the mainstream prices of recycled PP products will rise first and then fall in the second half of the year, but the average price may be slightly higher than in the first half, and market participants may still focus on maintaining stable volume strategies.
Post time: Jul-29-2024