PE Industrial Chain Profits Gain Ground on Price Increases
Introduction: December 2024 witnessed an overall increase in the prices along the PE industrial chain. This was primarily due to the less-than-expected release of new capacity, combined with the extended maintenance over some units. The PE price peaked for the year in December, prompting producers to elevate their operating rates, resulting in increased gross profits.
Prices rose along the industrial chain in December.
In December 2024, prices of most products in the industrial chain moved upwards. The crude oil price showed a downward trend, which barely supported the cost of products in the industrial chain. However, the tight supply of some resources boosted the spot market prices. China’s PE market price went up in December. The new capacity was not released as expected, and the restart of some units was postponed, which resulted in the tight supply of some grades of spot goods and boosted the PE spot market price. In downstream industries, greenhouse film producers raised their prices following the feedstock price increases to maintain production profits. As for stretch film, most producers completed the delivery of their previous orders, and prices rose following the rise in feedstock prices. Overall, although it was hard to improve market demand, the average prices of most products in the industrial chain increased in December due to supply crunch.
Industrial Chain Price
Operating rates of PE and its downstream industries showed different trends in December.
In December 2024, the PE output loss due to maintenance decreased by 85.8kt from last month. The operating rate of the PE industry grew as the output loss due to unit maintenance fell and new units were put into operation this month. Meanwhile, the demand for agricultural film waned. The operating rate of the greenhouse film industry sagged with significantly fewer orders, and that of the stretch film industry also dropped due to sluggish orders.
Industrial Chain Operating Rate
Gross profits in the industrial chain showed mixed trends in December.
In December 2024, profits in the PE industrial chain were mixed. In December, crude oil price decreases led to reduced costs of naphtha-based PE, while the spot price of PE rose to its highest level of the year, thus increasing the gross profit. However, looking at the downstream products, in the face of the continuous increase in feedstock prices, the finished product of the agricultural film gained slow price growth, widening the price spread between these two and thereby resulting in lower gross profit compared with last month. In terms of stretch film, its prices rose along with the feedstock prices, which resulted in higher gross profits.
Industrial Chain Gross Profit
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