PE market keeps range-bound with weak supply and demand

In 2021, PE market moves higher first and then retreats. Currently, PE market is in narrow range-bound, and the most market players are standing watching.

On supply side: Many plants shut for maintenance during the spring turnaround season, and new plants are expected to put into production.

Since late March, plants shut for maintenance gradually, and the operating rates of China domestic PE plants declined from 95% to 83% at present. Currently, plants shut intensively, some of which are in accordance with the usual spring maintenance, and some of which are supposed to shut in 2020 and have been postponed to shut in 2021. The main plants involved are as follows:

According to the above figure, the total production capacity of the maintenance plants is 3.54 million tons. Also, the 200kt/year LDPE plant of Sinopec Shanghai PC plans to shut in late Apr. PetroChina Jilin PC and ZRCC plans to shut for maintenance in the second quarter of 2021, and many coal-based PE plants plans to shut for turnaround in the second to fourth quarter of 2021. However, the specific time are not clear for the time being.

At the same time, the new plants is likely to start up gradually. First of all, the 400kt/year LLDPE/HDPE plant of Haiguolongyou (Daqing Lianyi) that is scheduled to be produce on-spec products in late Apr has been postponed to put into production in May. Moreover, the 400kt/year HDPE plant of Satellite petrochemical has tested run, and it may produce steadily in May; in addition, the 400kt/year LLDPE/HDPE plant of Ningbo Huatai Shengfu Polymeric Material start trial production in early Apr, and may soon put into production.

On demand side: the raw material price is high, and orders are declining.

Compared with the relatively stable downstream prices, although raw material prices have fallen somewhat compared with the previous period, it remains high. The negative cash flow in the previous stage has been significantly alleviated, and the current cash flow is basically near the break-even line.

In addition, the spring ploughing basically ends, and the factory orders have gradually delivered. The demand for mulch plastic film weakens, and the procurement pace gradually slow down.

From the point of view of the above supply and demand, at present, PE market will remain volatile in the short-term. However, some products with high prices may retreat, mainly referring to LDPE.