Supportive Factors Drive Recent Polyethylene Price Increases in China

January 9th News

According to the commodity market analysis system, the average price of LLDPE (7042) on January 2 was 6,410 CNY/ton, and on January 9 it was 6,625 CNY/ton, an increase of 3.35%. The average price of LDPE (2426H) on January 2 was 8,400 CNY/ton, and on January 9 it was 8,933 CNY/ton, an increase of 6.38%. The average price of HDPE (2426H) on January 2 was 6,862 CNY/ton, and on January 9 it was 7,022 CNY/ton, an increase of 2.33%.

Recently, the quotations for polyethylene have been continuously rising. In terms of supply, with increased maintenance and manageable inventory, some supplies are tight. The HDPE facility at Ningxia Baofeng and the LDPE facility at Maoming Petrochemical have entered maintenance, slightly easing the short-term supply pressure. On the demand side, the peak season for agricultural films has ended, and the production of greenhouse films in northern China has basically come to a halt, with orders continuously declining; however, orders for packaging films have slightly increased, maintaining only a just-in-time replenishment pace. Downstream factories are resistant to high-priced raw materials, mostly engaging in rigid demand procurement, and are cautious about entering the market, with actual transactions mainly involving lower-priced supplies. In terms of costs, the previous rise in raw material prices has supported the polyethylene market. Futures: The main polyethylene futures contract has been climbing, closing significantly higher on January 7th compared to before the holiday. On January 8th, the futures continued to operate at a high level, continuously supporting the sentiment of the spot market. Market participants' sentiment has noticeably improved, and petrochemical companies and traders have been continuously raising their quotes.

Forecast: In the short term, boosted by futures and constrained supply sources will keep the market in a relatively strong consolidation. Looking ahead to the medium and long term, demand for agricultural films remains weak during the off-season, and as the Spring Festival approaches, downstream production activities will further decline. Coupled with expectations of new capacity coming online, the upside potential for polyethylene will be limited.