China PE Market Weakens(December 10)
Domestic Petrochemical Inventory: Sinopec and PetroChina's polyolefin inventory totaled 690,000 tons, a decrease of 5,000 tons from yesterday.
PE Spot Market Analysis: Today, the domestic PE market continued its weak downward trend. In North China, prices for linear, high-density, low-density film, and low-density fiber grades all declined, fluctuating between 20-60 yuan/ton.
In East China, prices for linear, high-density, low-density film, and low-density fiber grades all saw adjustments compared to yesterday, with price reductions ranging from 50-100 yuan/ton. In South China, only the price of low-density fiber grades remained stable, while prices for linear, high-density, and low-density film grades declined.
Currently, the domestic PE market is showing a divergent pricing trend on the supply side. Producers are generally keeping their ex-factory prices stable, while some companies are lowering their ex-factory prices by 20-400 yuan/ton to alleviate spot market pressure, leading to an overall downward shift in market prices.
Demand-side support is insufficient, and downstream enterprises are adopting a cautious purchasing attitude, mostly adhering to the principle of replenishing inventory as needed. Purchasing is primarily driven by rigid production needs, with a weak willingness to actively stockpile. Market transactions mainly revolve around low-priced resources.
The loose supply and demand situation, coupled with weak demand, further suppresses market activity, resulting in a generally subdued trading atmosphere. Buyers and sellers mainly engage in negotiation and price negotiation, and the market as a whole exhibits a weak, stable, and downward trend.
PE Spot Price Forecast: In the futures market, the L2601 contract price fluctuated narrowly in the night session. Although there was a slight rise, it quickly fell back. Prices weakened in the morning session, and in the afternoon session, prices initially rose before falling again.
Currently, the polyethylene market lacks positive macroeconomic factors, market expectations are cautious, and there is little substantial upward momentum. Coupled with continued ample spot supply, the industry's destocking process is hampered, the rate of inventory digestion is slowing, and inventory pressure is gradually accumulating, exerting continuous downward pressure on market prices.
Against this backdrop, traders, in order to accelerate inventory turnover and alleviate financial and sales pressures, generally adopted a strategy of actively offering discounts to move inventory, further lowering the market transaction center and resulting in a consistently weak market trading atmosphere. Downstream demand was weak and exhibited differentiated weakness.
The peak season for agricultural film was fully over, with greenhouse film production in the north essentially halted, and only a small number of mulch film tender orders were released sporadically in the northwest, failing to provide effective support.
The packaging film industry was affected by the waning effect of holiday stockpiling, with a sharp decrease in new orders and a slight decline in operating rates. End-user enterprises mainly replenished their stocks based on immediate needs, with a low willingness to actively stockpile. Overall demand was insufficient to absorb sufficient spot resources.
In summary, the core contradiction of supply-demand mismatch is unlikely to be alleviated in the short term. Coupled with the delayed transmission of macroeconomic benefits, the polyethylene market is expected to continue its weak consolidation trend in the short term, with little improvement in trading atmosphere. Purchases based on immediate needs will continue to dominate the market transaction pattern.
Mainstream PE Market Prices:
PE Futures Analysis: On December 10th, L2601 opened at 6550, reached a high of 6592, a low of 6523, held 267,012 contracts, settled at 6556, compared to the previous settlement of 6595 (down 39), with a daily trading volume of 289,654 lots, outstanding funds of 1.226 billion, and a net outflow of 331 million.
Domestic PE Indices: According to data from TuDuoDuo, on December 10th, the domestic HDPE spot index was 7276, down 48; the LDPE film spot index was 8343, down 58; and the LLDPE spot index was 6670, down 65.
Shenhua Auction Statistics: Linear PE auctioned 550 tons today, with 43 tons traded. High-density polyethylene (HDPE) auctioned 0 tons today, with 0 tons traded. Low-density polyethylene (LDPE) auctioned 0 tons today, with 0 tons traded.
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