China PE Market Analysis (January 7)
Domestic Petrochemical Inventory: Sinopec and PetroChina's polyolefin inventory totaled 610,000 tons, a decrease of 50,000 tons from yesterday.
PE Spot Market Analysis: The domestic PE market continued its upward trend today. In North China, prices for linear, high-density, low-density film, and low-density fiber grades all increased compared to yesterday, with overall price fluctuations ranging from 50-350 yuan/ton.
In East China, only the price of low-density film grades remained stable, while prices for linear, high-density, and low-density fiber grades increased to varying degrees, with price increases ranging from 50-150 yuan/ton. In South China, prices for linear, high-density, low-density film, and low-density fiber grades also showed an upward trend, with price adjustments ranging from 50-150 yuan/ton.
Driven by positive performance in the futures market, trading activity in the PE market increased, and sentiment was generally bullish. Currently, market prices are showing a differentiated adjustment trend, with most producers choosing to maintain stable ex-factory prices, while only a few companies have raised prices, with adjustments ranging from 20-400 yuan/ton.
Traders closely followed market trends, actively pushing up prices. However, actual transactions have not yet fully materialized, with negotiations remaining the primary method, gradually driving market prices higher. Speculative sentiment intensified, with the enthusiasm for chasing higher prices significantly boosting the market.
However, downstream factory order growth remained weak, and end-users primarily replenished their inventories to meet immediate needs, failing to provide effective fundamental support for market upward movement.
PE Spot Market Forecast: In the futures market, the L2605 contract saw a volatile upward trend in overnight trading. Prices plunged rapidly in the morning session but rebounded strongly in the afternoon, maintaining a high level of fluctuation.
Macroeconomic factors provided some support to polyethylene market sentiment, but the weak demand situation remained unchanged, resulting in a market exhibiting a divergence characterized by "warm sentiment but insufficient fundamental support." Traders followed market trends and shipped goods accordingly. Low-priced resources sold relatively smoothly because they aligned with downstream purchasing expectations.
However, downstream factories generally resisted high-priced resources, resulting in weak overall restocking. Plastic packaging companies were affected by the off-season for end-consumer demand, leading to a significant reduction in orders and maintaining only small-batch, just-needed production. Automotive plastic parts manufacturers experienced slow order follow-up due to lower-than-expected vehicle production and sales, keeping operating rates low.
Daily-use plastic products companies were hampered by the end of the retail restocking cycle, significantly slowing their raw material procurement. On the supply side, a PE unit at Shanghai Petrochemical restarted today. Although market inventory decreased compared to yesterday, considering the overall industry operating rate and capacity base, the potential pressure on the supply side has not been substantially alleviated.
In summary, the core contradiction in the current market lies in the mismatch between supply and demand. Short-term boosts in macro sentiment are insufficient to offset the reality of weak end-consumer demand. The polyethylene market is expected to exhibit a range-bound trading pattern in the short term.
Mainstream PE Market Prices:
PE Futures Analysis: On January 7th, L2605 opened at 6595, reached a high of 6666, a low of 6581, held 505,678 contracts, settled at 6625, compared to the previous settlement of 6522, a gain of 103. Daily trading volume was 566,498 lots, with outstanding funds totaling 2.351 billion yuan and net inflow of 12.14 million yuan.
Domestic PE Indices: According to data from TuDuoDuo, on January 7th, the domestic HDPE spot index was 7114, up 7; the LDPE film spot index was 8556, up 150; and the LLDPE spot index was 6573, up 63.
Shenhua Auction Statistics: Linear polyethylene auction volume today was 800 tons, with a transaction volume of 650 tons. High-density polyethylene auction volume today was 0 tons, with a transaction volume of 0 tons. Low-density polyethylene auction volume today was 0 tons, with a transaction volume of 0 tons.
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