In 2023, the average price of LLDPE at the beginning of the year was 8,392 RMB/ton, and the average price at the end of the year was 8,237 RMB/ton, a decrease of 1.86% for the whole year. In 2023, the average price of LDPE at the beginning of the year was 9,100 RMB/ton, and the average price at the end of the year was 9,082 RMB/ton, a decrease of 0.19% for the whole year. In 2023, the average price of HDPE at the beginning of the year was 8,466 RMB/ton, and the average price at the end of the year was 8,500 RMB/ton.
2023 Market Review
The fluctuation and decline from January to May were reflected in LLDPE and LDPE products. The trend of HDPE products is relatively independent, with more maintenance of HDPE equipment. Due to insufficient supply of goods, the quotation has been significantly increased. The international banking crisis in March resulted in a strong sense of pessimism in the macro market. The second quarter is a period of concentrated equipment maintenance, and the pressure on domestic PE supply has been alleviated. However, agricultural film is in the traditional off-season, and downstream factories are shutting down and repairing more equipment, which has dragged down spot prices.
Starting from June, LDPE has been rising and then falling, with strong resilience and less room for decline compared to LLDPE and HDPE. In June, the Federal Reserve suspended interest rate hikes, and news of domestic interest rate cuts boosted macroeconomic sentiment. In August, the cost side crude oil remained at a high level, coupled with a tight supply of some PE grades. The seasonal recovery of orders from agricultural film enterprises has continued, and market demand expectations are improving, boosting market sentiment. Starting from September, the parking and maintenance equipment of enterprises has been gradually restarted, and the supply of PE has increased. The gold and silver prices have not been realized, and downstream operating rates are at a low level, resulting in lower than expected market demand.
Cost side: Due to the large number of oil price variables in 2023, oil prices have been operating at a low level for a long time. It is expected that the average oil price in 2024 may still be slightly higher than in 2023, but due to demand constraints, oil prices will not increase significantly. Supply side: As of the end of 2023, the domestic PE production capacity was 31.228 million tons. In 2023, the new PE production capacity was 2.52 million tons, with a year-on-year growth rate of 8.78%. Polyolefins are in a capacity expansion cycle. In 2024, the new domestic PE production capacity was about 6.13 million tons, with an expected growth rate of 19.62%. There is not much pressure to invest in production in the first half of the year, so it is necessary to pay more attention to the pace of production in the second half of the year. In terms of imports, due to the continuous increase in domestic production capacity year, The dependence on PE imports has decreased in 24 years. On the demand side: In 2023, most downstream operating rates of PE were at a year-on-year low, and market demand was lower than expected. The global economic situation in the past 24 years is not optimistic, with China's policies facing a positive direction and the expectation of a US interest rate cut heating up. Under the influence of the interweaving of long and short positions, the increase in market demand may be limited.
In October of the second half of 2023, the PE market experienced a significant decline, with crude oil falling and downstream operating rates being lower than expected. Market demand was lower than expected, which suppressed the weak downward trend of the PE market. At the end of 2023, linear products were boosted by futures, and spot prices slightly increased. In the first half of 2024, there will be significant pressure on the domestic supply side, and it is necessary to pay more attention to the pace of production in the second half of the year. The demand for PE from January to February is limited, and prices will mainly fluctuate in a narrow range. The peak season for plastic film demand from March to April may boost market demand, and prices may experience an upward trend, but the upward space is limited. Overall, it is expected that the PE market will experience a narrow adjustment in the short term.
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