August 27th China PE Market Analysis
Domestic Petrochemical Inventories: Polyolefin inventories from both crude and crude oils reached 705,000 tons, down 25,000 tons from yesterday.
PE Spot Market Analysis: Today, domestic PE market prices showed a range-bound trend. In North China, only low-pressure film grades saw price increases, while linear, high-pressure, and low-pressure wire drawing grades saw price declines.
In East China, only linear grades saw a slight price decline, while low-pressure film grades saw price increases, while high-pressure and low-pressure wire drawing grades remained stable. In South China, only high-pressure grades saw price increases, while linear, low-pressure film, and low-pressure wire drawing grades remained stable. Currently, domestic PE ex-factory prices are showing signs of multi-directional divergence.
Some manufacturers are maintaining stable quotes as they wait and see the market, while others are lowering their ex-factory prices by 20-100 RMB/ton based on inventory or order levels. A few companies, driven by cost support or local demand, are raising prices by 50-100 RMB/ton. Demand remained flat, with no substantial improvement in end-use demand. Overall, rigid demand remained strong.
Downstream processing companies continued to adopt a cautious approach of "purchasing on demand and taking as needed," with no significant increase in market price acceptance or purchase volumes. Market trading activity remained limited due to the lack of clear positive drivers on both the supply and demand sides. Traders generally adopted an aggressive selling strategy during periods of price surges, leading to a strong market sentiment.
PE spot price forecast: In futures trading, the L2601 contract price fluctuated narrowly in the evening session, with a slight upward shift in the center of gravity. Prices consolidated in the morning session, with minimal fluctuations, before fluctuating downward in the afternoon session.
Domestic PE plant operations remain generally stable, with the industry's operating rate remaining relatively stable. Plants previously scheduled for shutdown or resumption have yet to release specific timelines, resulting in a generally stable and controlled supply-side market.
On the demand side, currently still in the traditional off-season for consumption, downstream processing companies (such as those producing films and pipes) are operating at low capacity, with no significant incentive to increase production. Procurement is primarily driven by rigid, immediate production needs, with limited willingness to stock up on raw materials and purchases.
This has led to a lack of activity in the overall market. However, with the traditional peak demand season of September approaching, some downstream companies have begun monitoring future orders and raw material price trends, raising market expectations for improved demand during the peak season. Traders, based on the current supply-demand balance and anticipated peak season, are primarily maintaining stable prices and adopting a wait-and-see approach.
Only in some regions or for specific grades, due to limited supply, are prices being cautiously raised slightly. However, to facilitate firm transactions, most traders remain open to a degree of negotiation, resulting in a significant market characterized by transaction flexibility.
Overall, the polyethylene market will remain in a transitional phase between the end of the off-season and the anticipated peak season in the near term. The stable supply structure is unlikely to see significant changes. While there are no substantial breakthroughs on the demand side, the anticipated peak season will provide some support for market confidence. The overall market price is expected to fluctuate within a narrow range, with limited room for price fluctuations.
Mainstream PE Market Quotes:
PE Futures Analysis: August 27th, L2601 Opening Price: 7399, High: 7414, Low: 7360, Open Interest: 412,274, Settlement Price: 7389, Yesterday's Settlement: 7427, Down 38, Daily Trading Volume: 222,311 Contracts, Deposited Funds: 2.125 Billion, Inflow: 13.2 Million.
Domestic PE Index: According to Tuduoduo data, on August 27th, the domestic HDPE spot index was 7692, up 22 points; the LDPE film spot index was 9708, up 4 points; and the LLDPE spot index was 7406, down 13 points.
Shenhua Auction Statistics: Today's auction volume was 200 tons, and 200 tons were traded.
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