1. Price Trend
In November, the three major types of the domestic PE market showed a downward trend. The LLDPE market in East China fell this month and then rose, and fluctuated within a narrow range. The HDPE and LDPE markets continued to decline this month. According to the data from SunSirs, LLDPE 7042 dropped to about 7,416.67 RMB/ton at the end of the month; LDPE 2426H dropped to about 8,125 RMB/ton at the end of the month; HDPE 5000S dropped to about 7,169.67 RMB/ton at the end of the month. The decline ranges from 200-300 RMB/ton.
2. Market Analysis
Entering November, the peak season for downstream demand has passed. Demand is weak. The supply pressure in the plastic market has not decreased. Therefore the contradiction between supply and demand still exists. At the beginning of the month, the overall market was mainly down. Except for some goods with little inventory and strong resources, most of them shifted their focus down. Although the linear futures rebounded slightly which supported the market mentality, but the merchants were cautious and the overall gain was limited. In the later period, the linear futures continued to fluctuate with some petrochemicals lowering their prices. And the market's supply cost support was weak. Under the fear of falling prices, merchants adjusted prices, and then the prices of various types of the market fell to varying degrees. The replenishment enthusiasm of the downstream factories is relatively low. Until the end of the month, the linear futures market continued to rise slightly, and the merchants' mentality was better, and they were more active in listing higher price. The downstream market entered more inquiries and the market atmosphere improved. In addition, near the end of the month, the ex-factory prices of petrochemicals are mostly stable, and market cost support is still acceptable. The LLDPE market rebounded slightly, and the HDPE and LDPE markets stopped falling and stabilized.
In terms of downstream enterprises, the operating rate of PE downstream agricultural membranes in November decreased with orders decreasing. And procurement on demand was the main factor. Orders were not as many as in previous years. The offer is adjusted according to the supply of resources, and the downstream needs to maintain just-in-time purchases. The operating rate of large and medium-sized shed film enterprises has dropped to 30%-60%, and the operating rate of small enterprises has been around 10-40%. There is less demand for mulch film, and individual mulch film manufacturers produce a small amount.
Imports and exports: In October 2019, PE imports were about 1.3365 million tons. Among them, LLDPE imports were 425,200 tons, HDPE imports were 643,000 tons, LDPE imports were 268,300 tons. The total PE export in October 2019 was 28,200 tons. Among them, PE exports amounted to 8,500 tons, HDPE exports amounted to 16,300 tons, and LLDPE exports amounted to 33,400 tons.
3. Market Forecasting
SunSirs’s analyst PE analyst believes that the current petrochemical ex-factory price is basically stable and the market cost support is still adequate. But some of the maintenance equipment in the early stage of the market started up, increasing market supply pressure. Downstream demand peak for agricultural membranes has passed. And supply and demand contradictions remain. The enthusiasm of the downstream to enter the market has weakened. In addition to the need to just pick up the goods, the factory mostly waits and sees. It is expected that PE remains weak.
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