Polyethylene: Where There Is Wind, There Is Waves

Around the Dragon Boat Festival, polyethylene, which has always been modest, takes advantage of the policy dividend to set off a small wave of price rises. From the plastic city price point of view, since May 25, the polyethylene market rising trend is obvious, high pressure material Daqing Petrochemical 2426H from 11400 yuan/ton, up to the current 11800 yuan/ton, up 400/ ton; Linear material Zhenhai Refining 7042 increased from 9200 yuan/ton to the present 9200 yuan/ton, up 400 yuan/ton; The low pressure wire drawing material Daqing 5000S has increased from 10,200 yuan/ton to the present 10,500 yuan/ton, up 300 yuan/ton. So, in the case of unsatisfactory transaction, in addition to macro factors, what force boost the market bottom rebound? The author simply analyzes as follows.

The international crude oil

Good news for the international oil market. First, with the summer oil peak approaching, U.S. strategic oil reserves have fallen to historic lows. Second, Iran's oil exports are weaker than expected, which could affect international oil supplies. Thirdly, the EU will no longer import Russian crude oil in principle, which will greatly reduce the amount of oil in circulation on the market and further raise the price. Fourth, Opec + Opec bellwether Saudi Arabia recently announced price increases for its oil exports to Asian markets. Finally, the easing of the epidemic in Asia has boosted demand. West Texas Light Oil (WTI) July futures settled at $122.11 / BBL as of June 9 ($114.67 / BBL as of June 9). Ice Brent crude for August delivery settled at $123.58 / BBL in London from $122.84 / BBL at start of month. The price of crude oil has protected the bulls, carrying polyethylene along with them.

futures

The domestic epidemic has been basically brought under control, logistics has gradually resumed, and transactions in the spot market have improved. Macro policy to stimulate market sentiment, Shanghai resumption of work and production led to a rapid rebound in futures, recovery of the early decline. On May 24, the settlement price of LLDPE futures fell to 8,494 yuan/ton. By June 9, the settlement price had reached 9,118 yuan/ton, rebounding over 600 points. Whether the market can continue to maintain high prices will become one of the important factors about the market trend.

Petrochemical enterprises

The upstream performance has laid a solid cost base for the market, and at the same time, manufacturers have responded positively. However, according to the reflection, the downstream factory for high price of goods source mentality still exists, the operation is still based on on-demand procurement.

The supply and demand

Supply: First of all, in terms of inventory, as of June 9th, the total inventory of general plastics of The Two Oil companies was 735,000 tons, slightly lower than that of the same period last year by 0.68%, with little change in inventory and reasonable pressure. Secondly, in terms of maintenance, in June, domestic early production reduction, maintenance devices have started, the new maintenance devices are mainly Qilu petrochemical, Zhongtian He Chuang, Sichuan Petrochemical short stop; Lianyungang Petrochemical is affected by the control cost and suffers serious profit loss. It plans to stop for 40 days. June 9 to 21, Jilin Petrochemical linear device maintenance stop. PE maintenance losses in China are estimated at 208,800 tons in June, 151,000 tons less than in May. Finally, in terms of import, the short-term price difference between internal and external bidding is still obvious, the import arbitrage window is still closed, domestic merchants are not interested in buying, cautious, and there is little pressure from the import volume.

Demand: policy stimulation expectation and reality of the transaction is weak, the contradiction is still intense. The convening of the national economic conference boosted the confidence of merchants and improved the market atmosphere. In addition, with the lifting of the closure of Shanghai and the implementation of the logistics and transportation policy, the demand is likely to increase. However, from the practical point of view, although the short-term demand is better, it obviously supports the market, but June is in the traditional low demand season. With the increase of high temperature weather in the later period, the demand is expected to gradually weaken, which will increase the market worry atmosphere.

Conclusion: In a word, at present, the good news of polyethylene market mainly comes from the macro boost, the alleviation of epidemic situation and the strong power of cost drive. Meanwhile, the current downturn of plastic market downstream is not optimistic, and the end users are indifferent to the rising market price. Traders can not rush to catch up, should be cautious wait and see after the appropriate operation.