China PE: Weakens as Inventory (February 9)
Domestic Petrochemical Inventory: Sinopec and PetroChina's polyolefin inventory reached 500,000 tons, an increase of 75,000 tons from last week.
PE Spot Market Analysis: Today, the domestic PE market showed a generally weak and stable trend. In North China, prices for linear, high-density, low-density film, and low-density fiber grades all declined, with price reductions ranging from 20-100 yuan/ton. In East China, prices for high-density and low-density film grades remained stable, while prices for linear and low-density fiber grades declined, fluctuating between 20-50 yuan/ton.
In South China, prices for linear, high-density, low-density film, and low-density fiber grades remained unchanged from last Friday. Today, PE producers' ex-factory prices showed a steady adjustment trend, with prices for different grades fluctuating in both directions. The decline ranged from 50-500 yuan/ton, while the increase ranged from 100-300 yuan/ton.
Affected by this, market participants adjusted their quotations accordingly, with actual transactions mainly based on negotiated deals. The market is currently characterized by a strong wait-and-see attitude. While some merchants are cautiously inclined to raise prices, downstream buyers are primarily focused on immediate needs, limiting the overall support for prices.
Coupled with the continued consolidation in the futures market by midday, which failed to provide a significant boost, the spot market price trended downwards, with trading activity remaining slow.
PE Spot Market Forecast: In the futures market, the L2605 contract saw a slight initial rise in overnight trading, followed by a decline. Prices traded within a narrow range in the morning session, before trending downwards throughout the afternoon.
With the Spring Festival approaching, domestic consumption is entering its peak season for purchasing New Year's goods and preparing for family reunions. Supermarkets and stores are stocked with a wide variety of goods, and express delivery parcels are experiencing a pre-holiday surge. However, this consumer spending spree has not translated into a surge in the polyethylene market. Instead, influenced by the holiday schedule, the industry is gradually entering a transitional period of market closure.
As a result, domestic logistics and transportation gradually ceased operations as workers returned home, leading to a decline in cargo turnover efficiency. This, coupled with downstream industries such as plastic weaving and packaging also experiencing worker layoffs, resulted in a continued decline in industry operating rates.
Even though some companies still had outstanding orders from the Spring Festival holiday, overall market consumption remained weak. Furthermore, downstream pre-holiday stockpiling had largely concluded, and raw material procurement demand nearly ceased, causing market sentiment to weaken accordingly. From an industry perspective, the holiday-related consumer benefits were primarily concentrated in end-user retail, offering limited impetus to upstream polyethylene production.
This is a typical seasonal characteristic of the chemical market before the holiday. In the short term, the polyethylene market will continue its weak supply and demand pattern. While supply-side plant operations remain relatively stable, demand support is almost exhausted.
Coupled with the sluggish pre-holiday market atmosphere, a weak and volatile trend is highly probable, with little chance of a significant rebound. Market demand will only slowly recover after the holiday as downstream companies gradually resume operations and logistics recover.
Mainstream PE Market Prices:
PE Futures Analysis: February 9th, L2605 opening price: 6769, highest price: 6790, lowest price: 6715, open interest: 518609, settlement price: 6759, previous settlement price: 6763, down 4, daily trading volume: 327062 lots, idle funds: 2.44 billion, capital inflow: 40.23 million.
Domestic PE Index: According to data from TuDuoDuo, on February 9th, the domestic HDPE spot index was 7124, down 5; the LDPE film spot index was 8522, down 25; the LLDPE spot index was 6813, down 11.
Shenhua Auction Statistics: Linear PE auction volume today: 800 tons, transaction volume today: 132 tons. High-density polyethylene auction volume today: 0 tons, transaction volume today: 0 tons. Low-density polyethylene auction volume today: 0 tons, transaction volume today: 0 tons.
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