Downstream Players' Reaction to the PE Price Declines

China PE Market and Downstream Operation Analysis

Influenced by the reduction on prices from petrochemical companies and the downward futures, the PE prices decreased in a row, amid a bearish LLDPE market atmosphere. The downstream demand was tepid, which gave limited support to the PE market.

This week, the LLDPE market prices continued to decrease, the LLDPE price of Petrochemical Daqing Company in Shanghai market fell to RMB 8,600/mt, down RMB 150/mt W-O-W, down 1.7% M-O-M. At present, the mainstream LLDPE prices in China are RMB 8,350-8,600/mt. The futures were in the downtrend this week, amid a tepid futures market atmosphere. As of April 19, the closing prices decreased by RMB 170/mt W-O-W. The petrochemical companies gradually reduced its prices, with market losing support from cost, and the players cut offers this week. Most end players maintained hand-to-mouth buying.

The number of China’s refining enterprises involved in the maintenance increased. According to statistics, about 1,550kt/a PE capacity at petrochemical companies was involved in the maintenance, and the loss due to maintenance was 21.3kt, up 3.4kt W-O-W. Hereinto, there was only the 60kt/a FDPE unit at Petrochemical Lanzhou Company, relating to the LLDPE, involved in the maintenance. The LLDPE supply was sufficient this week.

The demand for green house film maintained weak, with relatively low operating rates of 10%-30%, and the orders were sparse. The mulch film entered the slack season, and there were sparse newly added orders at producers, with operating rates of 50% at most major producers, and the operating rates of small and medium producers were low. The operating rates of wrapping film were around 55%, with relatively stable orders at major producers and sparse orders from small and medium producers, and the whole demand was sluggish due to the low operating rates of most producers. Affected by a “buy up” mentality and the continuously falling PE prices, the downstream producers maintained basic purchases.

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