The polymer market has been in a general downward trend for nearly 4 weeks, but there have also been important spurts of price growth. This situation generally shows that the relative superiority of supply over demand still exists, but the market is susceptible to change. It is not possible to speak explicitly of the superiority of supply over demand for all grades; although there is still a relative inflammation in polypropylene or polyethylene terephthalate grades that can be tracked on the stock exchange and in the market.

The increase in the trading volume of chemical products and polymers on the commodity exchange, along with the decrease in base prices and the decline in the polymer price index, all indicate the creation of a better environment for consumers in the downstream industries to expand the volume of their production activities. Of course, the decline in raw material prices can limit part of the recession in this market, but the polymer market is still experiencing a relatively deep recession, which is exacerbated by price fluctuations and the ups and downs of supply volume on the stock exchange. Now that prices are declining, we are witnessing an increase in supply volume on the commodity exchange, although it is late and has its own ifs and buts. The nature of the decline in prices and the growth in supply volume may be able to balance some of the difficulties of the recession in the petrochemical industry, and of course, the continued decline in rates means a reduction in concerns about inflationary stagnation, although it requires a reduction in rates and continuous supply in the market, while also providing space for using export markets in regional countries.

Peeling off the skin in the polymer market

In previous reports, we mentioned the visible or hidden events in the polymer market and the possibility of stagflation was also mentioned. Stagflation occurs when there is both weak production and effective demand for final products in the petrochemical downstream industries, and we also witness price growth and an increase in the price of finished products, and of course, an increase in the price of raw materials. Until the past few weeks, statistics indicated a serious increase in the price of finished products on the commodity exchange and the free market, which alone was sufficient for the growth of finished product prices. Although we witnessed a decrease in effective demand and relative weakness in these industries, it now seems that the conditions have adjusted slightly. On the one hand, prices on both the commodity exchange and the market have entered a phase of relative decline, and of course, this downward trend may continue along the path of basic prices. This is while the inventory is relatively high and this data itself is an important reason for the lack of serious growth in the volume of transactions on the commodity exchange, especially in a situation where the purchase price of these shipments is extremely diverse and from this perspective, it can only be said that the market does not have the previous ability to grow prices due to the relatively high volume of supplies and the decrease in base prices on the commodity exchange.

On the other hand, the fragile sparks of growth in the volume of polymer transactions on the commodity exchange will also be another data that can support the strengthening of the production process in this market. Now, in a situation where there is a potential for price declines in global markets and the secondary foreign exchange market does not have much potential for rate increases, perhaps the mentality of reducing official prices is not far from the mind. On the other hand, the volume of polymer transactions on the commodity exchange has not yet appeared strong, and it cannot be said that the complementary industries have come out of recession in the current situation, and even the secondary data in the market highlights this concern. On the other hand, strengthening the volume of transactions in the chemical products market means strengthening the production process, which itself will be an introduction to a better outlook for the market and complementary industries.

Considering these cases, it can be said that the volume of concerns in the polymer market is weakening, meaning that the fear of stagflation, which is considered one of the most difficult economic periods, is not as strong as before, and perhaps with the reduction in prices, we will witness a strengthening of the volume of production and consumption of polymer products. On the other hand, the export restrictions are still continuing as before, and perhaps this situation will be better for the end consumer in Iran. Considering the above, the very harsh outlook from the past has been slightly adjusted, and if we witness an increase in the volume of polymer and chemical products transactions on the commodity exchange, it is likely that this difficult hurdle will be overcome; It will be easier. But now the prices are very high and the acceptance of this rate in the market will take time and does not rule out the possibility of a deeper recession.

Improvement in the volume of polymer trading on the commodity exchange

Last week, we witnessed an increase in the volume of polymer trading on the commodity exchange, to the point where a growth of nearly 17 percent was recorded compared to the previous week. More precisely, in the previous week, nearly 50 thousand tons of various polymers were traded, and the most important reason for this growth should be sought in the strengthening of the volume of supplies. Last week, we witnessed a 30 percent increase in supplies, which is an important figure and led to more than 78 thousand tons of supply being recorded in the physical hall of the commodity exchange. This supply figure is one of the highest figures in the history of the commodity exchange and is also the highest supply figure since the week ending May 13. These figures should be taken very seriously, especially in a situation where we are witnessing a decrease in base prices on the commodity exchange, meaning that the attractiveness of supply must be reduced unconsciously. On the other hand, the demand volume grew by nearly 25 percent, which shows that the strengthening of supply has been faster than the strengthening of demand.

This situation means that large supplier companies have become more inclined to supply than the growth of buyer demand. This can also be calculated and examined in this way, that is, in a situation where global prices are decreasing and the dollar rate in the NIMA system is also decreasing; more supply means selling at higher prices, so domestic supply is more justified. On the other hand, there is the issue of international strictness and a decrease in global prices, both of which reduce the attractiveness of exports, so the importance of selling on the commodity exchange and even supporting domestic industries is strengthened. On the other hand, the high inventory of petrochemical companies also poses problems for production conditions, so it is better to sell the shipments in any way possible.

If the above is true, it is better to ask the supplying companies that played a role in the IFA commodity exchange more than other periods last week why they did not play a better role in the market with maximum supply in the previous week, when the supply volume was nearly 18 thousand tons less than the previous week and of course the prices were recorded 8% higher on average? It seems that some large companies are having trouble even determining their own interests and are causing losses to themselves and throwing the market out of balance by miscalculating. It seems that the growth in supplies is accompanied by weak demand in the polymer market and has caused many large companies problems in the sales phase. As a specific example, last week, nearly 64 percent of the polymer supply was traded, which was a record close to 100 percent in late September.

Even in previous weeks and with higher base prices, this figure had never fallen below 70 percent, but last week saw the lowest percentage of purchases since late last year, and many supplies entered matching. It is better