PE Market to Perform Relatively Well in Early Jun

SCI99

2020-06-05

导读：PE Market to Perform Relatively Well in Early JunIn Ap

PE Market to Perform Relatively Well in Early Jun

In April, the overall PE market prices kept fluctuating within a wide range, and in May, the prices of PE were largely stable and fluctuated within a narrow range. During May, the number of PE units that experienced maintenance increased, and the oversupply in the PE market was relieved to some extent. Meanwhile, the international crude oil prices and LLDPE futures prices trended up, supporting the market sentiment. Moreover, due to the improvement in PP market, many participants speculated in the PE market. At the end of May, as the “Two Sessions” were held, more participants adopted a bullish attitude toward the future PE market.

Specifically, from May, China’s refineries entered their intensive unit maintenance period, and the unit maintenance significantly cut the inventory pressure at PE producers. At the end of May, the PE inventory at producers dropped by around 100kt from 2019. Moreover, Sinopec and PetroChina issued policies about keeping their profit rates at relatively high levels. Therefore, in May, most PE producers maintained their ex-works prices at high levels firmly, supporting the market prices of PE from a feedstock perspective.

From May 22 to May 27, the “Two Sessions” were held. Considering that the COVID-19 has dramatically impacted China’s economic development, most participants believed that the government would issue policies to stimulate the economic development and market consumption. Therefore, the bullish sentiment supported the market prices of PE to some extent. However, Q2 is the slack season of production. From February to March, many downstream users had replenished a large number of low-priced PE resources, and they were cautious about further replenishment as the prices of PE kept rising. Meanwhile, the LLDPE futures prices started fluctuating. Accordingly, at the end of May, the market prices of PE stayed largely stable.

In June, the overall downstream demand for PE will still in its slack season, giving limited support to the PE market. However, the unit maintenance at PE producers will still be intensive, balancing the supply-demand fundamentals. Currently, the PE inventory at producers is at a relatively low levels, and the ex-works prices at PE producers are likely to be stable-to-rising, supporting the market sentiment to some extent. SCI suggests that participants should pay close attention to the PE unit maintenance schedule, the arrival of imported PE resources at ports and the PE inventory at producers.

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