Polyethylene (PE): A brief surge followed by a one-day rally!

Domestic Petrochemical Inventory: Sinopec and PetroChina's polyolefin inventory totaled 680,000 tons, an increase of 30,000 tons from yesterday.

PE Spot Market Analysis: Today, the domestic PE market price generally showed a range-bound trend. In North China, the market price of linear polyethylene (PE) grades fell, while the market prices of high-pressure and low-pressure film grades both rose. The market price of low-pressure fiber grade remained stable, with overall price fluctuations ranging from 50-150 yuan/ton.

In East China, only the market price of high-pressure grades rose, with an increase ranging from 90-110 yuan/ton. The market prices of linear, low-pressure film, and low-pressure fiber grades remained unchanged from yesterday. In South China, the market prices of linear, high-pressure, and low-pressure film grades all rose, while the market price of low-pressure fiber grade fell from yesterday, with overall price adjustments ranging from 50-200 yuan/ton.

Domestic polyethylene producers maintained a generally stable ex-factory price, flexibly adjusting prices according to their own inventory and sales pace, resulting in a clear divergence in price performance. Some manufacturers raised their prices due to inventory clearance or cost considerations, with adjustments ranging from 20 to 500 yuan/ton. Other companies proactively offered discounts to accelerate inventory turnover, with reductions reaching 50 to 1000 yuan/ton.

Downstream end-users maintained only routine, rigid purchases and did not engage in concentrated restocking. Against this backdrop, intermediate traders could only flexibly adjust their prices in response to spot market fluctuations, resulting in a mixed market with no unified direction.

Currently, the market lacks a unified pricing indicator, large-volume transactions are rare, and most transactions require buyers and sellers to negotiate prices for specific orders on a case-by-case basis. Overall, spot transactions rely entirely on one-on-one negotiations, leading to strong pricing flexibility and fragmented price fluctuations.

PE Spot Market Forecast: In the futures market, the L2609 contract briefly rose after opening in the night session, reaching its intraday high before falling back. In the morning session, prices fluctuated slightly around the low range, generally in a weak bottoming-out state. In the afternoon session, prices initially rose slightly, experiencing a mild recovery, but the rebound was weak, leading to a sharp decline.

Currently, the local spot supply of polyethylene is tightening, and traders are generally taking advantage of the temporary price increase to quickly realize profits. Low-priced goods are easier to sell in the distribution process. Downstream processing is only maintaining routine replenishment without large-scale stockpiling. The market supply and demand pattern has only slightly improved, without a substantial reversal. 

As major petrochemical companies fully resume normal external sales at the beginning of the month, the supply of goods in circulation continues to increase, and the cost support effect of raw materials is gradually diminishing. End-user manufacturers remain cautious and hesitant, and the previously prevalent optimistic outlook has faded.

Many distributors are forced to slightly reduce their profit margins to offer discounts and encourage sales in order to boost actual transaction volume. Considering various factors, the boost from localized supply shortages is relatively weak and insufficient to reverse the overall fundamental situation.

In the short term, polyethylene prices are unlikely to experience a sustained upward trend and will likely maintain a wide range of fluctuations. Even if there are occasional slight rebounds, the upward momentum will be weak. The mainstream market strategy will focus on flexible discounting to move inventory, and the overall market trend will be one of stability with a slight downward bias.

Mainstream PE Market Prices:

PE Futures Analysis: July 1st, L2609 opening price: 6966, highest price: 7005, lowest price: 6804, open interest: 422673, settlement price: 6908, previous settlement price: 6937, down: 29, daily trading volume: 376051 lots, idle funds: 2.016 billion, fund outflow: 25.57 million.

Domestic PE Index: According to data from TuDuoDuo, on July 1st, the domestic HDPE spot index was 7602, up 41; the LDPE film spot index was 8997, up 84; the LLDPE spot index was 7391, down 8.

Shenhua Auction Statistics: Linear PE auction volume today: 400 tons, transaction volume today: 400 tons. High-density polyethylene auction volume today: 0 tons, transaction volume today: 0 tons. The auction volume for low-pressure gas today was 150 tons, and the transaction volume was also 150 tons.

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