SunSirs: The Pressure from Supply Increases, Chinese Market of Polyethylene Can’t Rise Anymore

Late July, the market of polyethylene doesn’t show a climbing trend. Instead, it starts to decline, and it can be seen that in East China LLDPE、LDPE and HDPE have varying degrees of drop. According to the data monitored by SunSirs, three major genera affiliated to PE has the declining range from 50 to 450 RMB/ton. Among them, LDPE is especially transparent, which dropped by 3.18% during the period (7.16-27).

In the second half of July, PE market mainly falls. With the restarting of the apparatus in SINOPEC SABIC and other companies, the rate of reopening is recovering, so the market supply accordingly increases. However, at this time, the downstream companies are going through off season, and affected by social public hygiene events, the rate of reopening is low. Therefore, the demands are not satisfactory, the market activism is not so high. Most order small quantity by rigid demands, so the supply is relatively sufficient. The descending trend of Dalian LLDPE spot is apparent, which influences the futures’ attitude. Most of the traders lowered the ex-factory price, but the polyethylene still keeps weak. The attitude of traders are not so good, for most of them remains bearish.

As for the supply, within a week (July 17^th-24^th) the burden is going higher. The increase amplitude of PE corporations’ reopening rate has overtaken 3%. The production increases 14,000 ton, and the maintenance amount decreases 21,200 ton week on week. As for the demand, the reopening rate of downstream polythene agricultural sheeting has increased by 0.3% week on week, and it reaches 18.1% this week. The reopening rate of wrapping film has a slight drop, ranging from 0.1% to 67.1%.

In terms of futures, the future price of plastic rallies after the supply pressure from the spot market, and the influence of macro emotion slumps from a high level. The dominant contracts on plastic rises 0.21% last Monday (July 20^th), and subsequently the following four days are still decreasing. Up to last Friday (July 24^th) closing, it has declined 145 within a week.

At present, the futures weakness really influences the spot market attitudes. As the petrochemical companies are finishing repairing apparatus off and on, the supply will increase recently. In addition, the downstream demands are ordinary, and the importing amount is low. Overall, the market will be positive in a short period of time, but the likelihood of going down is also concerned.

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