Stalemated PE Market amid Intertwined Bullish and Bearish Factors
In December, international crude oil prices stopped declining and rebounded. The PE futures market fell into the downward channel after the short-term rebound. The consumption of inventories was slow but produces tended to stay firm on the prices. The imported resources were in tight availability. With the downstream demand keeping shrinking, the market sentiment became more bearish. The market fell into a stalemate situation.
Crude oil price and LLDPE price trend
International oil prices experienced heavy losses in early December due to the impact of the mutated virus in South Africa, with continuous declines and high volatility. The newly mutated virus appeared in South Africa and spread to Europe and North America, and many countries issued restrictions on air travel, and the market is concerned that the virus may be more contagious than the Indian virus, fearing that there will be an immune escape. Besides, the faster-than-market-expected pace of monetary policy tightening by the Federal Reserve and the continuation of Saudi Arabia and Russia’s modest production increase strategy together caused a deep drop in crude oil market prices. With the market’s growing awareness of the virus, which is more transmissible but has a very low lethality rate, various countries are not increasing their blockade measures. Panic continued to subside and oil prices saw a rebound. However, concerns about the mutated virus persist, limiting the height of the oil price recovery to some extent.
The collapse in crude oil prices aggravated the bearish sentiment in the PE market. With the crude oil prices rebounding, the PE market climbed, but the overall price increase was limited.
LLDPE futures market and inventory analysis
Affected by the rebound of international crude oil, the PE futures market continued to fall at the beginning of the month after a short rebound, but the overall upside momentum is not enough.
Driven by the rise in the futures value, producers lifted the spot prices in early December. However, the overall inventory at producers was consumed slowly. The maintenance was at the low end as the year end coming, presenting the reduced output loss and increased output. Besides, the demand for greenhouse film continued to fall, giving limited support to the market. Traders adopted a cautious stance and were not keen to make procurements. Afterward, the futures market entered the downward channel. Though producers tried to maintain firm offers, traders cut down the offers to sell more goods in the bearish trading atmosphere.
LDPE and LLDPE price trend
This month, producers tended to hold firm offers. Backed up by the rebound in crude oil price and futures value, spot prices of LDPE and LLDPE inched up. Then the futures market fell, but the EXW prices were kept stable. There were several reasons.
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