PE Market Price to Trend Sideways with Output Decreases
Overview: In May, China’s PE market price showed an N-shaped trend overall, and the average price further went up. The output loss caused by maintenance remained high in May, and the supply of certain varieties decreased. What’s more, macroeconomic positives drove the futures price to a high level. Therefore, the PE market price remained firm. In June, although the output loss due to maintenance losses is expected to decrease, some producers maintain their operating rates at low levels, so the output is expected to fall. It is anticipated that the PE market price may trend sideways in June.
Output
In June, the PE output is expected to drop by 16.85% from that in May, with LLDPE decreasing by 4.52%, LDPE by 12.41%, and HDPE increasing by 0.09%. The supply of some goods remains tight in June. As for LLDPE, the output of film and injection is expected to increase, but the output of MLLDPE is envisaged to see a notable decline. As for LDPE, the output of cable, coating, and film is estimated to fall, while that of LDPE heavy-duty film material and injection is expected to increase. As for HDPE, the output of film, raffia and blow molding is anticipated to increase, while that of other varieties may see limited changes.
Maintenance
It is expected that fewer PE units may be involved in maintenance in June 2024, and the output loss will likely be 358.1kt, down 100.1kt M-O-M. Therein, LLDPE will likely take up 139kt, LDPE may take up 45.8kt and HDPE may take up 173.3kt. Although the output loss caused by maintenance may decrease, some PE producers may reduce their operating rates. As a result, the PE output may drop in June.
Outlook
As for supply-demand fundamentals, maintenance in June may mainly concentrated in Northeast China and North China, and the market supply of some products may still be tight. For LLDPE, downstream finished product inventory remains high, resulting in significant inventory pressure. Although the supply is expected to decrease M-O-M, the overall demand may fall short of expectations. Therefore, the LLDPE market price is envisaged to trend sideways. In terms of LDPE, the scheduled production for film may show a decreasing trend. What’s more, the prices of imported resources may be high. Although demand is expected to be weak, the overall LDPE market sentiment is strong, slightly supporting domestic market prices. As a result, the LDPE price may fluctuate at highs. In terms of HDPE, the demand for film may remain stable, so the price is expected to show a strong trend. Meanwhile, prices of other varieties are expected to fluctuate downwards.
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