Polyethylene (PE): Up 1 yuan today!

Domestic Petrochemical Inventory: Sinopec and PetroChina's polyolefin inventory totaled 550,000 tons, a decrease of 10,000 tons from yesterday.

PE Spot Market Analysis: Today, the domestic PE market showed an overall weak consolidation trend. In North China, only the market price of low-density film grade remained stable, while the market prices of linear, high-density, and low-density fiber grades fell, with price reductions ranging from 10-300 yuan/ton. In East China, only the market price of low-density fiber grade remained stable, while the market prices of linear, high-density, and low-density film grades all declined, with overall price fluctuations ranging from 20-150 yuan/ton.

In South China, the market prices of linear and high-density grades remained unchanged from yesterday, while the market prices of low-density film and low-density fiber grades fell by 50 yuan/ton. PE manufacturers' ex-factory prices were generally stable with slight adjustments, with most grades decreasing by 50-200 yuan/ton, and only a few specific grades showing slight increases.

Affected by weakening cost support, market prices have shifted downwards, putting significant pressure on traders' inventories. They have generally offered discounts to accelerate turnover. Downstream enterprises are cautious about the market outlook, adopting a wait-and-see approach and showing no intention to actively replenish inventory. They are only purchasing according to their production needs, resulting in a poor supply-demand balance and generally weak market performance.

PE Spot Price Forecast: In the futures market, the L2605 contract price rebounded after hitting an intraday low in the night session. Prices declined again in the morning session, then entered a period of consolidation before trending upwards in the afternoon. Currently, the polyethylene spot market supply remains ample, while futures market volatility has intensified, highlighting the struggle between bulls and bears and failing to provide stable and effective price guidance for the spot market.

Downstream operating rates continue to decline, and end-user demand remains weak. Insufficient order follow-up in mainstream application areas has led to a continuous accumulation of finished product inventory for enterprises, gradually compressing profit margins. Meanwhile, uncertainty in the raw material market has led to cautious business decisions and a strong wait-and-see attitude among enterprises, resulting in persistently low restocking intentions.

Purchases are being made only based on immediate production needs, further dragging down overall operating activity. With the year-end approaching, traders face an urgent need for cash flow. To alleviate inventory and cash flow pressures, they continue to offer discounts to move inventory. The seasonal impact of the approaching Spring Festival holiday is also deepening, with downstream factories gradually entering a shutdown and holiday period.

Enterprises generally lack the motivation for large-scale pre-holiday stockpiling, opting instead to utilize existing inventory to maintain production. This has significantly shortened the stockpiling cycle, keeping market transactions consistently sluggish.

In summary, the core supply-demand imbalance in the current market has not fundamentally changed. Coupled with the pressure from tightening year-end liquidity and Spring Festival shutdowns, the polyethylene market is expected to continue its weak and volatile trend in the short term.

Mainstream PE Market Prices:

PE Futures Analysis: On January 21st, L2605 opened at 6646, reached a high of 6672, a low of 6616, held 504,362 contracts, settled at 6640, compared to the previous settlement of 6639, a gain of 1 unit, daily trading volume was 374,602 lots, outstanding funds were 2.353 billion yuan, and net inflow was 51.71 million yuan.

Domestic PE Indices: According to data from TuDuoDuo, on January 21st, the domestic HDPE spot index was 7204, down 25; the LDPE film spot index was 8614, down 109; and the LLDPE spot index was 6718, down 39.

Shenhua Auction Statistics: Linear PE auction volume and transaction volume were both 500 tons and 500 tons respectively. High-density polyethylene (HDPE) auction volume and transaction volume were both 0 tons and 0 tons respectively. Low-density polyethylene (LDPE) auction volume and transaction volume were both 0 tons and 0 tons respectively.

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