Polyethylene (PE): How much upside potential is there?
Domestic Petrochemical Inventory: Sinopec and PetroChina's polyolefin inventory totaled 645,000 tons, a decrease of 15,000 tons from yesterday.
PE Spot Market Analysis: Today, the domestic PE market showed an overall strong upward trend. In North China, prices for linear, high-density, low-density film, and low-density fiber grades all increased, with price increases ranging from 200-350 yuan/ton. In East China, prices for linear, high-density, low-density film, and low-density fiber grades all rose compared to yesterday, with price fluctuations ranging from 100-300 yuan/ton. In South China, prices for linear, high-density, low-density film, and low-density fiber grades all increased, with price adjustments ranging from 50-300 yuan/ton.
Currently, domestic PE producers are exhibiting a divergent pricing pattern, with no uniform adjustment in ex-factory prices. Only a small number of manufacturers are maintaining their original prices, while most are raising them by 100-600 yuan/ton. Only a few niche brands are lowering prices by 200 yuan/ton due to their own supply and demand.
Driven by a persistently bullish sentiment, the market price center is steadily rising. Traders are generally actively raising their offers to move inventory, flexibly adjusting their daily quotes in line with factory price changes, rather than sticking to fixed prices. Although prices are rising, there is no rigid pricing in actual transactions. Negotiations between upstream and downstream players still have ample room for negotiation, with transactions primarily based on flexible bargaining.
Even with cost and sentiment-driven price increases, there has been a failure to effectively stimulate end-user purchasing enthusiasm. Downstream willingness to purchase has not significantly improved, and overall market activity has only slightly improved, with very limited improvement in transactions. The overall trading atmosphere remains subdued.
PE Spot Market Trend Forecast: In the futures market, the L2609 contract saw relatively flat price fluctuations overnight, maintaining a narrow consolidation range. Prices surged strongly in the morning, exhibiting a one-sided upward trend, but gradually turned downwards after reaching the intraday high in the afternoon, entering a period of high-level consolidation.
Although the polyethylene industry is currently in its traditional off-season, with overall end-user purchasing momentum slightly insufficient, most downstream manufacturers are opting for small-batch stockpiling at low prices. Only a few manufacturers have taken advantage of the price increase to slightly replenish their stocks, resulting in only moderate transaction volumes. However, the off-season pressure has not reversed the market's generally strong tone, with positive support from crude oil prices playing a crucial supporting role.
The escalating geopolitical tensions in the Middle East have directly driven up international oil prices; coupled with the US revoking Iran's oil sales waivers and Iran accusing the US of violating the ceasefire agreement, regional tensions continue to rise, and these two positive factors have significantly bolstered the cost of raw materials.
Meanwhile, the market inventory of spot goods is not abundant, limiting the pressure on supply. Traders have strong market confidence and have actively raised their quotations, contributing to the rising market. Overall, the cost advantage brought by geopolitical factors is the core element influencing the market, effectively offsetting the negative impact of weak demand. In the short term, the polyethylene market will maintain a slightly bullish and volatile pattern.
Given that geopolitical risks have not yet dissipated and there is no significant accumulation of spot inventory, prices are generally more likely to rise than fall. However, constrained by off-season demand, there are no conditions for a significant unilateral surge, and the upside potential will be somewhat limited.
Mainstream PE Market Quotations:
PE Futures Analysis: July 8th, L2609 opening price: 7013, highest price: 7150, lowest price: 6990, open interest: 424283, settlement price: 7070, previous settlement: 6966, increase: 104, daily trading volume: 499733 lots, idle funds: 2.104 billion, capital inflow: 20.44 million. ... Domestic PE Index: According to data from TuDuoDuo, on July 8th, the domestic HDPE spot index was 7930, up 159; the LDPE film spot index was 9463, up 258; and the LLDPE spot index was 7720, up 208.
Shenhua Auction Statistics: Linear polyethylene auction volume and transaction volume were both 200 tons today. High-density polyethylene auction volume and transaction volume were both 0 tons today. Low-density polyethylene auction volume and transaction volume were both 0 tons today.
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