China Small BM HDPE Supply to Increase on Rising Production Ratio
China’s petrochemical units producing small BM HDPE register a total capacity of 3.65 million mt/a, accounting for 11.6% of the production schedules of existing petrochemical enterprises. Since the beginning of 2024, the production ratio of small BM HDPE has gradually increased and is currently at its highest level. It is expected that the market supply of small BM may increase in June, while the operating rates of downstream industries are envisaged to edge down amid the traditional slack season of demand. As a result, the supply-demand fundamentals may not provide the market price with enough support. That is to say, a slight decrease is anticipated in the domestic small BM market price in June. Subsequent trade flows and changes in the production schedules of petrochemical enterprises also need to be taken into consideration.
China Small BM HDPE Producers
The petrochemical enterprises in China that produce small BM HDPE include North Huajin Chemical Industries, a joint venture in Northeast China, Ningxia Baofeng Energy, Shaanxi Yanchang Zhongmei Yulin Energy and Chemical, an enterprise in East China, Zhejiang Petroleum & Chemical, Sinopec Maoming Petrochemical, a joint venture in South China, Sinochem Quanzhou Petrochemical, Sinopec Zhongke (Guangdong) Refinery and Sinopec-SK (Wuhan) Petrochemical, involving a total of 11 units. These units have a combined capacity of 3,650kt/a, accounting for 11.6% of the production schedules of existing petrochemical enterprises, an increase of 7.31 percentage points from two weeks ago. The production of small BM HDPE accounts for an increasing ratio and has reached the highest level since the beginning of 2024.
Chinese-made Small BM HDPE Grades and Prices in Three Major Regions
In North China, the supply is reliant on resources from other regions due to limited local supplies, but the recent inflow is unstable. Due to the overhaul at PetroChina Dushanzi Petrochemical starting in mid-May and the switch of the HDPE unit at Sinopec Sabic Tianjin Petrochemical to produce pipe, the output of small BM in Northwest China and North China significantly declined, leading to a shortage in market supply and rapid price increases in North China. The price of Dushanzi PC 5502XA rose to RMB 8,900/mt due to maintenance impacts, and North Huajin Chemical 5502 and Yanchang 5502 were well received in the market with prices around RMB 8,700-8,800/mt. Other grades are priced between RMB 8,350/mt and RMB 8,500/mt.
In East China, Chinese-made small BM HDPE prices were mostly within the range of RMB 8,400-8,650/mt, mainly including Zhenhai Refining 5502H, ZPC 5502S and Golden Phillips 5502, primarily relying on local supplies with limited inflow. The price of Dushanzi PC 5502XA was pushed up to nearly RMB 8,900/mt due to unit overhaul, but overall supply is limited.
In South China, there was intensive production of small BM HDPE, with recent production schedules focusing on this product, maintaining a high production ratio. Due to stable production schedules for small BM by enterprises in this region, market inventory has always been maintained at ample levels. Intense competition among local enterprises makes it difficult for product prices to rise significantly and results in small price spreads among products, mostly ranging between RMB 8,250/mt and RMB 8,450/mt. South China has abundant local supplies and fewer resources flowing from other regions, positioning the small BM HDPE prices in this region at a relatively low level among the three major regions.
Looking ahead, in terms of supply, due to the high enthusiasm of domestic PE enterprises for scheduling small BM HDPE production, domestic output is expected to increase. Meanwhile, the import volume is envisaged to remain stable in the short term. Therefore, the supply of small BM HDPE may see an uptick in June. On the demand side, the traditional slack season of demand falls in June, so a slight decrease in downstream operating rates is anticipated with reduced new orders. As a result, downstream producers may show low enthusiasm for advance stockpiling and mainly purchase small batches of feedstock to maintain production when prices are relatively low, chipping away its support to the HDPE market. Therefore, Chinese-made small BM HDPE market price may inch down in June, and attention needs to be paid to subsequent trade flows and changes in petrochemical enterprise production schedules.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
Please click "Read more" for the full article.
