China PE Market Weakens (December 17)
Domestic Petrochemical Inventory: Sinopec and PetroChina's polyolefin inventory totaled 700,000 tons, a decrease of 20,000 tons from yesterday.
PE Spot Market Analysis: Today, the domestic PE market continued its weak consolidation trend. In North China, only the price of low-density fiber grade remained stable, while the price of low-density film grade fluctuated. The prices of linear and high-density grades declined, with overall price fluctuations ranging from 20-80 yuan/ton.
In East China, the prices of linear, high-density, low-density film, and low-density fiber grades all fell, with price reductions ranging from 20-80 yuan/ton. In South China, the prices of linear, high-density, low-density film, and low-density fiber grades all decreased compared to yesterday, with price adjustments ranging from 50-100 yuan/ton.
Currently, the domestic PE market is exhibiting a weak operating pattern due to supply and demand imbalance. Producers' ex-factory prices are showing a "stable yet fluctuating" trend, with price adjustments concentrated between 20-200 yuan/ton. Affected by this, traders mostly adopt a market-following strategy to flexibly respond to market fluctuations.
Due to weak overall operating rates in downstream industries and limited receiving capacity, procurement on the purchasing side only maintained a need-to-buy pattern on dips, resulting in a sluggish market atmosphere and generally weak transaction performance. The weak supply and demand fundamentals further dominated market trends, causing prices to trend downwards.
The weakening prices, coupled with the pressure of slowing inventory reduction in the industry, further exacerbated the cautious sentiment of market participants, leading to an overall weak market sentiment. The industry is exhibiting a weak cycle where supply and demand, prices, and sentiment influence each other.
PE Spot Price Forecast: In the futures market, the L2605 contract price fluctuated narrowly in the night session. Prices trended downwards in the morning session, and after a slight rebound in the afternoon, prices began a rapid decline.
Currently, the polyethylene market continues to face pressure on both supply and demand. On the supply side, domestic PE plants are maintaining high and stable operating rates, with ample output. Coupled with increased inflows of low-priced overseas supplies, the market's supply redundancy pressure has significantly increased.
On the demand side, the market is generally weak. Downstream core sectors are showing low purchasing activity. The household plastic products industry is affected by the sluggish recovery in retail consumption, with orders for products such as plastic basins, buckets, and storage boxes decreasing year-on-year. Companies are mainly replenishing their raw material inventories with small orders.
While there is stable basic demand in the takeaway food container and packaging bag sector, the reduction in platform subsidies and cost control by merchants have increased the substitution rate for low-priced recycled materials, leading to a decline in virgin PE procurement. In the children's toy and outdoor products industry, intensified competition in the end-market and slower new product iteration have resulted in lagging order follow-up, with manufacturers primarily focusing on digesting previous inventory.
From an international and domestic perspective, fluctuations in international oil prices have limited support for the market. Insufficient maintenance at overseas PE plants has led to a global supply glut, and the continued opening of import windows further intensifies competition in the domestic market.
Overall, the supply and demand fundamentals lack substantial positive support, and industry players are generally cautious. In the short term, the polyethylene market is unlikely to escape its weak operating range. Constrained by persistent supply pressure and weak demand, it is likely to continue its weak and volatile trend, with severely insufficient rebound momentum.
Mainstream PE Market Prices:
PE Futures Analysis: On December 17th, L2605 opened at 6525, reached a high of 6543, a low of 6470, held 540,127 contracts, settled at 6511, compared to the previous settlement of 6545 (down 34), with a daily trading volume of 378,254 lots, outstanding funds of 2.45 billion, and capital inflow of 113 million.
Domestic PE Indices: According to data from TuDuoDuo, on December 17th, the domestic HDPE spot index was 7147, down 20; the LDPE film spot index was 8143, down 60; and the LLDPE spot index was 6515, down 43.
Shenhua Auction Statistics: Linear PE auctioned 800 tons today, with 200 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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