Increase in the price of petrochemical products; Stimulus or ineffective ?!

Of course, the market for petrochemical products these days is accompanied by many doubts. Uncertainties related to price fluctuations from time to time by one of the levers that determine the base price of petrochemical products in Commodity Exchange It appears that, in addition to the recessionary conditions that have recently plunged the market into an aura of ambiguity, it has intersected with a new plan to refine demand. It therefore injects more concerns into the markets of this market. According to this plan, the optimized quotas of petrochemical product applicants will be included in the plan from today, which will be calculated automatically from now on; In other words, in order to automatically calculate the quota in the Horizon plan, quarterly sales information of the generating units from the commodity exchange and the online transaction registration system is inquired by the optimizer. The main reason for this plan is to increase transparency among market participants in order to organize the market, which has long been accustomed to the culture of non-transparency. But the market residents are worried about how this plan will be implemented, which needs further explanation from its trustees. The main market decision makers, both in the upstream and downstream industries, need to organize the variables in the first step for the proper management of this market, the fluctuations of which are directly reflected in this market. The market is experiencing days when the trading volume of polymers is in a compensatory phase after an unprecedented drop of 35,000 tons, but stopped last week after several weeks of consecutive growth and before it could fully compensate for this sharp decline; Even at a time when the hope of a return to prosperity in this market was strengthened. Demand for raw materials also declined. Therefore, it is still not possible to speak with certainty about a complete exit from the stagflation situation. All of these factors must be taken into account alongside global market movements, which are at the helm of base price growth. A review of this week’s base prices, announced yesterday, shows that the rate of growth of this rate has been severely limited, which, for whatever reason, may be considered as a stimulus for demand for the current week, especially in the current week of new quotas. Optimizer is assigned to some grades and demand growth is expected from this route. To further explore the conditions of this market, the “world of economy” has interviewed Ahmad Bayat, a market expert in petrochemical products. At the beginning of his speech, Bayat pointed to the cessation of the growth of trading volume of polymer products and said that due to the unprecedented decline in the volume of polymer trade, we saw an increase in trading volume for several consecutive weeks, but last week the growth of this effective data in the commodity market stopped. It even experienced a slight decrease.

Continued growth of commodity prices in world markets

He added: “Part of this event is related to the price fluctuation of global markets, which has been constantly increasing the price of petrochemical raw materials in global markets for some time. Of course, these positive price fluctuations have occurred in almost all commodities, and the background to this has been the promising news of a positive corona vaccine test and the preparation of some countries to vaccinate their people. Hence, such news has caused the price movements in various global markets in the general economies of the world, because the outbreak of the corona virus is considered to be the main factor in weakening the global economy. The quarantine situation that followed the spread of the virus has affected economic activity to a large extent, but it seems that with the discovery of the corona vaccine, phase changes have begun in commodity markets and positive price shocks confirm this.

But and if demand

Ahmad Bayat further said: In the domestic market of petrochemical products, the basis of pricing of these products are the two influential variables of the world rate and the monthly average of half a dollar. Despite the volatile days of currency prices, these sharp fluctuations in currency prices have recently been limited and have reached some relative calm. For some time now, the basic prices of petrochemical raw materials in the commodity exchange have not been overshadowed by this channel. However, the positive flow of world prices on the base price has reflected its effect, so that these days the base prices of products in this market have taken an upward trend with the lever of growth of world prices. Rising raw material prices have a direct impact on the cost of producing units. Hence it raises the cost price of the final products. While the continuous growth of raw material prices since the beginning of the year has gradually affected the prices of final products, now that the third quarter of the year is over, this price growth is at a point where the market for many manufactured products does not have more price increases. The volume of demand from this place is very limited.

Another factor that limited the volume of demand is the end of the monthly optimization quotas of production units, which during the last week of December, as the last week of December, the goods that had one-quarter and three-month quotas, had reached the last days of their quotas. Was. Accordingly, there was no opportunity to buy for many products. Demand is expected to be offset to some extent this week by allocating January quotas. Of course, the growth of world prices can not be ignored, because the turmoil in the world exchange rate can directly affect the base price of raw materials on the stock exchange, and prices can rise again. He added: “Apart from the fluctuations of price factors that directly affect the market forces, ie supply and demand, there has been an increase in the monitoring of the free market of petrochemical products over the past week.” Following this, there was a lot of news about the closure of some warehouses that were buying and selling the raw materials of this market in a way outside the official and legal channels. Accordingly, the activity of intermediaries in this market was greatly limited, so the bulk of the market demand for these products was from the manufacturing units, and the purchase of intermediaries decreased because, following recent monitoring, even the possibility of selling previous purchases of these people is difficult; Therefore, buying new products only increases their trading risk. Eventually, all of these factors went hand in hand, reducing the demand for petrochemical products on the stock exchange and even in the open market.

Domestic market affected by global price fluctuations

Bayat pointed to the unpredictability of market conditions and said: “These days, the variables affecting this market have increased a lot, and especially in the long run, the possibility of predictability of the market situation has decreased.” But the current evidence suggests that, at least in the short term, we do not expect a significant reduction in prices among petrochemical products, also because global petrochemical prices have risen and in some high-demand products this increase is very large, so in terms of The hypothesis that the positive trend in world prices will continue is strengthened by the growth of oil prices in world markets, which has reached $ 51. Therefore, in the short run, one can not hope for a decline in world prices, but to what extent the growth of base prices with this effective lever will be a function of rising global prices and currency prices and market management.