After three dreamy weeks, did the sharp drop in the trading volume of polymers on the commodity exchange of Iran in this week seem like a solid slap in the market to remind us that we still can’t say for sure if we are out of recession.
Is the seriously reducing polymers trading volumes means demands realization or the market is returning to stagnation?
Some experts believe that demand volumes will come true, while others believe the market is about to fall again. However, be believe that it is only the time that will tell which theory is closest to reality.
This week (Oct.5-10) all factors were down. Starting from the beginning of the week, base prices were announced to decrease ( Click Here). The average price trend of the US$ value based on the calculations and discovery of the prices of the next week were also decreasing in almost every day of the week, as we saw a decrease in the US$ value, which sent a message to the traders that the prices are likely to fall, and as a result the next week will might be down! The same problem kept some of the demand back in buying and trading, delaying demand for at least a week.
Contrary to the prevailing notion, when prices go down, the market behaves not as much but as more. That’s why that this week’s demand jumped from 86,000 tons of last week to 71.600 tons this week. That is, a drop of 14,400 tonnes was recorded in market demand. This amount of drop in demand in this week is unprecedented for this year or at least before the recession begins. The same issue doubles the significance. Because, of course, this drop in demand volumes has a direct effect on the volume of transactions, and this can again stagnate the polymer market.
However, the decline in demand volume led to 56.400 tons (approximately) for this week. This is generally not a bad figure, but it is worth noting, given the specific market conditions for three consecutive weeks during which the trading volumes was set at 70,000 or even slightly more. In particular, when for three dreamy weeks, boom the market after three-months of downturn in the polymer markets.Trading volume this week showed a decrease of approximately 10,900 tons compared to the previous week when the stock market closed the polymers trading at 67,300 tons.The decline in turnover was also unprecedented even before the summer recession.
Decline in supply was another factor contributing to the decline in trading volume this week, though that is not to say a crucial role. But petrochemicals, which last week supplied about 94,000 tons of polymers, had 90,500 tons in this week, reflecting a decline of 3,500 tons of less supply. But overall, the supply was still in good condition this week, despite the decline, and it cannot be said that the decline in supply was likely to play a role – perhaps in the popular grades of several hundred tons – in reducing turnover.
There are two scenarios here, some experts believe that after three weeks of excitement, the market is realizing its demand, and others believe it is too early to do so, and that the market seems to be more scared and unprofessional. The main reason for this withdrawal is cited.
The second group warns that there will be a recession in the polymer market again. We will talk about the first group, but the reality is that there were a few mistakes made by officials this week, which unfortunately can be said to be a relatively laborious blow to the volume of transactions for polymers.
Officials at the Petrochemical’s Special Committee issued notices this week, first for a variety of PP and then for 25 other polymer and chemical products, reducing their optimum purchase ceiling. This made it unlikely that much of the liquidity that would have been purchased in the past few weeks from the almost-free-of-charge quota for all types of polymers could be bought. Therefore, part of the demand and volume of transactions also disappeared due to this mistake and the rush of the authorities.
The last market analysis that published at PIMI was: Iran Polymer Market Returns To Its Downward Trend In Base Prices
