Recently, the polyethylene market has been in a pattern of high volatility and first strong and then weak. According to the testing conducted by Shengyi Society, the average price of LLDPE (7042) was 8880 yuan/ton on April 6th and 8848 yuan/ton on April 10th, a decrease of 0.36%. LDPE (2426H) had an average price of 11650 yuan/ton on April 6th and 11883 yuan/ton on April 10th, an increase of 2.00%. The average price of HDPE (5000S) on April 6th was 10262 yuan/ton, and on April 10th it was 10487 yuan/ton, an increase of 2.19%.
Strong support on the cost side: The ongoing geopolitical conflicts in the Middle East have led to high international crude oil prices. The continuous loss of profits in the production of oil-based PE has forced domestic petrochemical enterprises to concentrate on reducing losses and conducting spring inspections. The strong expectation of supply side contraction has boosted the market’s bullish sentiment.
Supply side structural contraction: no new production, concentrated spring inspections, and declining output. Middle Eastern sources of goods are reduced and arrivals are low. As of early April, the social inventory of polyethylene was 623200 tons, slightly increasing month on month, and the high inventory suppressed the upward space of prices.
The demand side continues to be weak: the peak season for agricultural film is coming to an end, and downstream orders such as packaging, injection molding, and pipe materials are average. There is a strong resistance to high prices, and procurement has shifted to “on-demand, just in need”, resulting in weak high price transactions. LLDPE is mainly used for agricultural film, and is most directly affected by the end of the peak season for agricultural film, with the most obvious negative impact on the demand side. Therefore, it has the largest decline after rising.
It is expected that polyethylene will fluctuate at a high level, with a tug of war between long and short positions, and both cost support and demand drag will coexist. The short-term trend is strong, but caution should be exercised against a pullback.
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