PE Market: Weak Amid Dull Demand

Domestic Petrochemical Inventories: Polyolefin inventories from both oil and gas companies reached 805,000 tons, down 15,000 tons from yesterday.

PE Spot Market Analysis: Today, domestic PE market prices showed localized fluctuations and regional differentiation. Prices of linear, high-pressure, low-pressure film, and low-pressure wire drawing grades all fell to varying degrees in East China, with price reductions ranging from 10 to 70 yuan/ton. In South China, only high-pressure grades saw price increases, while prices of linear, low-pressure film, and low-pressure wire drawing grades remained stable. In North China, only linear grades saw a slight increase, while high-pressure grades saw price decreases.

Low-pressure film and low-pressure wire drawing prices remained unchanged from yesterday. On the PE production side, ex-factory pricing from major manufacturers remained stable. Only a few manufacturers, driven by low inventory levels and adjustments to regional supply and demand structures, increased prices for selected grades by 30 to 100 yuan/ton.

The overall price structure remained largely unchanged. From a distribution perspective, the current market's supply capacity is limited. Prices in most regions remain stable, with only a few traders offering narrow margins on slow-moving grades to accelerate capital turnover. Against this backdrop, traders are generally prioritizing aggressive shipments, mitigating inventory pressure through optimized quotes and flexible negotiation. However, overall market activity has fallen short of expectations, leading to a neutral to cautious stance among industry players.

For example, in the agricultural film industry, currently experiencing low demand, most small and medium-sized agricultural film factories have proactively reduced their operating loads to mitigate the risk of raw material price fluctuations. The industry's average operating rate has remained relatively unchanged compared to the previous period, with purchases of raw materials such as LLDPE significantly reduced. In the packaging film sector, affected by sluggish end-consumer demand, some companies have adopted a sales-driven production model.

While operating rates have increased by 0.6% compared to the previous period, this barely maintains basic production, and the rigid demand for LDPE is struggling to sustain upward market prices. The low operating rates of downstream industries directly constrained the actual consumption capacity of PE raw materials, making it difficult for the market to provide effective support on the receiving end.

This ultimately limited price adjustment and slowed traders' shipments. The overall market performance was characterized by "mainly stabilizing prices and lacking the ability to actively push prices higher."

PE Spot Price Forecast: In the futures market, the L2509 contract's night trading price showed narrow fluctuations. The price trend was relatively flat in the morning, continuing its volatile pattern. The price showed a clear upward trend in the afternoon trading, with increased volatility during the upward trend. As of today, the suspended PE units on the market have not yet resumed production, limiting polyethylene production capacity and creating uncertainty on the supply side.

The timing of the resumption of operation of some units remains uncertain, further exacerbating market concerns about future supply and adding uncertainty to market trends. The downstream polyethylene market is currently in its traditional off-season, with significantly weak demand. Traders are adjusting their trading strategies based on real-time market conditions.

However, due to weak trading in the high-price range, overall market activity remains low. Downstream companies, impacted by the off-season, are experiencing both year-on-year and month-on-month operating rates declines, significantly reducing their purchases of polyethylene raw materials. Procurement is primarily focused on meeting rigid demand for immediate production, with little incentive to proactively replenish inventory. 

Against this backdrop, the polyethylene spot market lacks effective demand support, and upward price momentum is limited, resulting in an overall weak consolidation pattern. Overall, absent significant positive factors, such as a significant rebound in demand or an unexpected, prolonged plant shutdown, polyethylene prices are unlikely to rise and will likely fluctuate around current levels. However, if a concentrated resumption of production in the future leads to a significant increase in supply, while demand remains weak, polyethylene prices may face downward pressure.

Mainstream PE Market Quotes:

PE Futures Analysis: August 5th, L2509 Opening Price: 7256, High: 7331, Low: 7253, Open Interest: 301,516, Settlement Price: 7288, Yesterday's Settlement: 7276, Up 12%, Daily Trading Volume: 183,396 Contracts, Deposited Funds: 1.546 Billion, Inflow: 15.68 Million.

Domestic PE Index: According to Tuduoduo data, on August 5th, the domestic HDPE spot index was 7649, down 16%; the LDPE film spot index was 9518, down 23%; and the LLDPE spot index was 7329, down 25%.

Shenhua Auction Statistics: Today's auction volume was 550 tons, with 484 tons traded.

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