LDPE not expected to shrug off weakness

Recently, the LDPE market maintains in consolidation, with occasional ups and downs, but the overall changes have been relatively small. According to statistics from CCFGroup, the price for LDPE has mostly fluctuated within 9150-9250yuan/mt since November. Based on the current supply and demand situation, it is unlikely that LDPE will continue to rise, and the market is mainly expected to inch down in the future.

Since 2023, LDPE market bottoms out and then rebounds overall. Since September, the market has entered a new round of decline and then rise, and now it is basically in a state of fluctuation. However, looking at the whole year, LDPE has not shown an independent trend in 2023, and its overall trend is more consistent with other products such as LLDPE.

According to the production situation, from Jan to May, the LDPE plants operated relatively steadily with occasional maintenance which had a relatively small impact on the market. The decline in the market was mainly influenced by the changes in the overall polyethylene market and macroeconomic factors. From June to July, the overall operating rate showed a downward trend, mainly due to intensively plant maintenance. By July, the production ratio of LDPE reached its lowest level of the year (5.52%). During that time, several plants, including CSPC, PetroChina Daqing PC, PetroChina Lanzhou PC, and Zhongtian Hechuang, all shut for mainteance, which resulted in a relatively tight supply in the spot market and further upward price rebound. Subsequently, the plants gradually resumed production, and the production ratio gradually increased. By the end of August, most of the previously shutdown plants had been restarted. However, the market momentum was insufficient, and LDPE prices had reached their peak. Then, the maintenance of the LDPE plants was relatively scattered, and the impact on the market is gradually reducing. The market is also returning to a trend similar to LLDPE.

Currently, the plants are mostly in operation, except for the temporary shutdown of the Sinopec Shanghai PC and Sinopec Maoming PC. However, both of these lines have relatively short shutdown times. Moreover, their production capacities are relatively small, totaling only 165,000 tons. In addition, the shutdown of Shaanxi Yanchang ChinaCoal II does not have an impact on LDPE production as it mainly produces EVA. Therefore, its shutdown has minimal effect on the market. Overall, the supply is expected to be ample in the near future.

As for demand, currently, the demand for agricultural films is gradually entering the slack season. The demand for agricultural greenhouses film, which require LDPE as a raw material, is also following this trend. Downstream factories have limited orders, and some small factories are gradually shutting down after completing their current orders. The operating rates of large factories have also slightly declined, resulting in a significant reduction in demand for LDPE as raw material. Moreover, the demand for other products is also returning to the seasonal slack period.

Overall, LDPE has not been able to establish its own independent market trend in the first half of the year, and it is unlikely to see much development in the short period of one and a half months ahead. In addition, the short-term supply is relatively stable, and even slightly sufficient due to the majority of plants being in operation. As the demand gradually weakens, the overall fundamentals of the market are relatively weak, and LDPE price may move down.