Boosted by the rebound in demand, the plastics market has rebounded recently. In the later period, plastic prices may oscillate in view of increased supply and falling costs.
Since July, the demand for shed film has increased, and the enthusiasm of low-end replenishment of traders and downstream enterprises has increased, and PE prices have risen. Technically, plastic prices are still in the downtrend channel, and whether the 1901 contract can stand at 9,560 yuan / ton is doubtful.
Demand is gradually picking up
In June, demand was not good and plastic prices continued to decline. However, after hitting a new low in the past year, the enthusiasm of the downstream companies for replenishment has rebounded, and the gradual improvement in the demand for shed film has further strengthened this replenishment behavior. At present, the downstream packaging film operating rate is stable; the shed film operating load is 23%, although it is low, but it continues to rise. Therefore, with the arrival of the greenhouse film consumption season, the demand for plastics is gradually increasing.
Demand is picking up, PE supply is tight, and stocks are falling. As of July 26, Huadong Petrochemical’s PE inventory was 50,265 tons, down 9535 tons from the high point in early July, a decrease of 15.94%; the inventory of Huadong warehouse was 126,000 tons, down 20,000 tons from the high point in early July. The decline was 13.70%; the social inventory was 217,965 tons, a decrease of 35,485 tons from the high point in early July, a decrease of 14%. Due to the low inventory, the willingness to replenish the market is further enhanced, thus stimulating the rise in methanol prices.
The maintenance device is restarted one after another.
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In the early stage, the price of plastics was low, and the efficiency of enterprises was not good. In addition, consumption was in the off-season. Many PE manufacturers chose equipment maintenance at the end of June and early July, and the production capacity reached 6.26 million tons/year. However, after the consumption rebounded and the price rose, the maintenance device resumed production in a large area, and some of the remaining devices will resume production in early August. In August, only Daqing Petrochemical’s 760,000 tons/year plant was scheduled to be discontinued.
It should be noted that the recent depreciation of the Renminbi, the cost of imported ethylene and plastic products will rise, and the import volume may decline in the later period. In addition, China’s tariffs on the United States are counter-productive, ethylene and plastic products are among them, while domestic imports of ethylene and plastics from the United States account for a large proportion, which may affect imports, and the latter market will have domestic output. The degree of dependence will increase.
Crude oil and coal are easy to fall
In August, the consumption of refined oil products is coming to an end, and the support for demand for crude oil prices has weakened. In addition, the number of active drilling in the United States continues to increase, production continues to be high, and US crude oil prices are weak. In the Middle East, although sanctions against Iran have affected the country’s exports, other OPEC member states are working hard to increase production, and the crude oil operation has a high probability of moving down.
In terms of coal, the peak of summer electricity consumption is coming to an end, and the inventory of coal-fired power companies has begun to accumulate, and coal prices have fallen sharply.
Crude oil and coal are easy to fall and hard to rise, and PE costs are bound to fall.
Market outlook
In summary, the peak season of greenhouse film consumption is approaching, coupled with the buying up and not buying down the psychology to promote downstream goods, plastic demand is picking up. However, the early maintenance devices have resumed production, and the increase in supply will alleviate the current tight supply problem. At the same time, the prices of upstream crude oil and coal have weakened, and the support for the plastics market has weakened. Based on the above judgments, the price of plastics does not have a basis for a sharp rise, and the recent market should treat prices with a short-term rebound.
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