The Price Trend of Polypropylene

Abstract

Since the polypropylene (PP) is one of the most widely used plastics, the futures prices of polypropylene are of great significance for studying the Chinese plastic market and related investors. This paper analyzes the factors that influence the changes in PP futures prices during and before the pandemic period by examining the correlation between upstream raw materials, downstream product markets, and PP futures prices. The results show that the futures prices of the raw materials are positively correlated with PP futures prices. Additionally, during the COVID-19 pandemic, due to the reduction in domestic PP demand in China, blocked crude oil imports, and refinery closures caused by control measures, the impact of crude oil futures prices on PP futures prices is relatively diminished. Furthermore, the increased demand for plastic packaging during the pandemic led to abnormal fluctuations in the packaging stock index, making it less valuable for analyzing PP futures prices. Finally, a regression analysis is conducted to establish a generalized predictive model for PP futures prices during non-pandemic periods, which is 9.91469 * crude oil futures prices + (-1.22343) * packaging stock index + 3.96203 * textile stock index + (-0.26201) * medical devices stock index. Its reliability is tested using data tests, residual vs. fitted analysis, and K-fold cross-validation, among other methods.