Polyolefins: Outlook on polyolefin supply and demand in January

Polyolefins: Outlook on polyolefin supply and demand in January

On the first day of the market opening in 2024, polyolefins did not continue the previous rally, futures opened green, the spot market fell and weakened, and the market showed weakness. How about the market in the later stage, only from the perspective of supply and demand fundamentals, the market is facing certain pressure, and the strength of varieties is re-emerging.

【Supply】The supply pressure of polyethylene is less than that of polypropylene

In January, the new maintenance of domestic polyolefin plans was limited, but some of the shutdown devices in the early stage continued to January, and under the high upstream costs, there is still the possibility of operational shutdown, resulting in an unexpected contraction in supply. However, there are still some new production capacity in polypropylene that are planned to be put into operation within the month, and the supply pressure of polyethylene is less than that of polypropylene.

In terms of polyethylene, the new planned maintenance devices are concentrated in the first half of the month, especially at the beginning of the month, but on the whole, there are not many new maintenances, only Lianyungang Petrochemical Low Pressure Phase II, Sinochem Quanzhou, Sino-Korea Petrochemical Low Voltage Phase II, etc. At the same time, the low-voltage second line of Yanshan Petrochemical, Qilu Petrochemical, Lanzhou Petrochemical and other units that were parked in December continued until January. Among them, the parking device is mostly low-voltage or fully enclosed, and the high-voltage and linear parking are relatively limited, which alleviates the low-voltage supply pressure to a certain extent.

In terms of polypropylene, since December, there are more parking devices in Germany, such as Juzhengyuan Phase I, Zhongjing Petrochemical First Line, Jingbo Second Line, etc., and the new maintenance plan is only Zhonghua Quanzhou First Line and Zhenhai Second and Third Line. However, it is worth mentioning that due to the postponement of a number of planned production units in December to January, the output in January may increase due to the landing of new production capacity.

However, it is worth noting that crude oil prices are still running at a high level, the cost of oil-based polyethylene remains high, and polyethylene prices are stagnation and falling, resulting in product profits continuing to decline. Among them, the profit loss of oil low-pressure is more than -1000 yuan/ton. According to the situation in December, there is still the possibility of operational shutdown of HDPE devices. The profit of oil and PDH PP declined, and the loss was still in the range of 800/900 yuan/ton, so the possibility of unplanned shutdown was not ruled out, and the supply side variables were concerned.

【Demand】In the traditional off-season, rigid demand is weakening

At present, the downstream categories of polyolefins maintain the year-end orders, new orders continue to weaken, and the impact of corporate capital withdrawal at the end of the year restricts the circulation of raw materials. In the raw materials did not appear to continue unilaterally or the price fell below the absolute low, the terminal year-end raw material procurement intention is not high.

In terms of polyethylene, entering January, it is difficult for downstream orders to perform well, and the terminal operating rate is still expected to fall further. In terms of subcategories: the demand for downstream shed and film has slowed down, the start of some enterprises has declined slightly, and the follow-up of orders has been limited. At present, large enterprises maintain bidding orders, and small and medium-sized enterprises mainly start or shut down. Pipes, hollow and wire drawing have entered the off-season, and demand has weakened, while some new orders for packaging and injection molding have followed up, mostly based on year-end production orders, and the operating rate has declined significantly compared with November and December.

In terms of polypropylene, except for BOPP and CPP, most of the subdivided downstream orders are seasonally weaker, among which PP pipes are affected by the weather, and the decline in start-up is particularly obvious. At the same time, the uneven order situation of leading enterprises and small and medium-sized enterprises still exists. At present, the production capacity of some large and medium-sized enterprises in BOPP has reached 5-7 days, and the start-up of enterprises is acceptable, which can basically reach 50 to 60 percent, and the start-up of small and medium-sized enterprises is significantly lower. At present, the profits of finished products in the downstream are still not high, especially the profits of small and medium-sized enterprises in the plastic weaving industry are basically flat or slightly loss, and the demand for raw materials is weak.

Summary: In January, the polyolefin market was difficult to maintain the previous continuous rise: under the weak supply and demand of polyethylene, the stalemate was finished, and the polypropylene paid attention to the progress of the new production capacity, and the price center of gravity was expected to move down slightly.