PE Producers Lowered Operating Load amid High Crude Oil Price
With the crude oil price going up constantly, the high production cost compressed the profit at PE producers. Affected by the Spring Festival holiday, the buying sentiment was insipid as the feedstock inventory was digested slowly. Facing the high cost and high inventory level, some producers chose to lower the operating rate.
1. Inventory was consumed slowly
From the perspective of PE inventory, the overall PE inventory at producers was maintained at a relatively high level since the Spring Festival holiday. It has reached a high level of 426kt by March 9. Although it has dropped from the post-holiday high level, the overall digestion speed was relatively slow. The inventory level increased by 76% from the low point before the holiday. The main reason for the accumulation of inventory was the influence of the accumulation of inventory during the Spring Festival holiday. The Y-O-Y increase reached 5.97%. The main reason for the Y-O-Y increase was that the domestic capacity grew rapidly since 2021, and some downstream enterprises delayed the start operation due to the Winter Olympics. The overall demand was relatively weak, resulting in a faster speed of inventory accumulation compared with last year.
As for port inventory, the port inventory pressure before the Spring Festival holiday was high. The inventory accumulation before the holiday was mainly because China’s PE imports dropped considerably as China’s domestic price was lower than the international price. Many resources flowed to other places where the prices were higher. The import volume from the Middle East dropped, and offers from foreign traders were limited. After the holiday, downstream plants resumed production slowly, and feedstock price was not stable. The overall port inventory swelled on the high transaction pressure.
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