Aug LLDPE Price Declined both M-O-M & Y-O-Y
Preface: In August, the overall PE market fluctuated downwards. The price declined from July and stayed at a medium-to-low level, hitting a yearly low of 2022. The LLDPE price in East China market averaged RMB 7,940/mt, down 3.3% M-O-M and 4.16% Y-O-Y. The decrease was mainly caused by the weak supply and demand as well as the falling feedstock prices.
In August, the market price of LLDPE fluctuated downwards. The price trend was mainly divided into 4 phases.
Phase I (Aug 1 – Aug 3): Supported by high crude oil prices, the PE price fluctuated within a narrow range at a high level.
Phase II (Aug 4 – Aug 15): The price dropped from RMB 8,100/mt to RMB 7,950/mt, down by 1.85%. The main reason for the decline was the falling crude oil prices. The futures prices fluctuated downwards despites a slight rebound.
Phase III (Aug 16 – Aug 21): The price fell from RMB 7,950/mt to RMB 7,750/mt, down by 2.51%, which hit a yearly low. The main reason for the decline was that the supply of Chinese-made PE increased notably due to the decreasing unit maintenance. Meanwhile, the large volume of imported PE with low prices affected China’s market, and the demand recovery was under expectation as users mainly purchased on a need-to basis in small orders.
Phase IV (Aug 22 – Aug 31): The price fluctuated upwards slightly by the end of the month. With the upcoming demand peak season in September, some market participants started to purchase low-priced resources, giving strong support to the market.
The price decline was also affected by the supply and demand. In August, China’s PE market saw oversupply, and the growth of the total supply outpaced that of total demand. The increment in the supply was mainly due to the declined unit maintenance and operating rates as well as the increasing arrivals of imported resources. As for the demand, downstream orders increased slowly, so the demand was sluggish. The export volume decreased in August from July, curbing the demand growth as well.
As for the cost, in August, that of naphtha-based was RMB 9,293/mt, down 6.26% M-O-M; that of coal-based was RMB 8,480/mt, down 3.24% M-O-M and that of methanol-based was RMB 7,846/mt, down 1.65% M-O-M. As for the profit, that of the naphtha-based was RMB -1,292/mt, up 17.13% M-O-M; that of coal-based was RMB -568/mt, up 10.95% M-O-M and that of methanol-based was RMB 58/mt, down 74.44% M-O-M.
On the whole, the overall PE market fluctuated downwards in August. The price declined from July and stayed at a medium-to-low level, hitting a yearly low of 2022. The LLDPE price in East China market averaged RMB 7,940/mt, down 3.3% M-O-M and 4.16% Y-O-Y. The decrease was mainly caused by the weak supply and demand as well as the falling feedstock prices.
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