Polyethylene Rides High, Price Fluctuations Limited

March 20th News

According to the commodity market analysis system, the average price of LLDPE (7042) on March 16 was 8,625 CNY/ton, and on March 20 it was 8,641 CNY/ton, an increase of 0.19%. The average price of LDPE (2426H) on March 16 was 10,666 CNY/ton, and on March 20 it was 10,750 CNY/ton, an increase of 0.78%. The average price of HDPE (5000S) on March 16 was 8,937 CNY/ton, and on March 20 it was 9,045 CNY/ton, an increase of 1.20%.

Cost side: The geopolitical conflict in the Middle East has escalated, causing violent fluctuations in international crude oil prices and providing strong support from the cost side.

Supply side: Chinese supply: An increase in plant maintenance in mid-March has led to a temporary tightening of supply. Import supply: A high proportion of sources from the Middle East, affected by shipping and geopolitical disturbances, have resulted in delayed arrivals and reduced offers. Imports are expected to significantly decrease in March and April, leading to a tightening of external supply. Inventory of petrochemicals has decreased month-over-month, but social inventory remains high, with slow destocking.

On the demand side: Demand for plastic film used in spring plowing and packaging is picking up, and downstream operating rates have increased month-on-month, though the increase has been limited. Downstream profits are under severe pressure, and purchasing enthusiasm remains low, making it impossible to sustain continuously rising prices. As a result, after prices surged briefly, they quickly fell back down.

Geopolitical conflicts remain uncertain, and crude oil prices continue to stay at high levels, providing ongoing support from the cost side. As a result, polyethylene prices will likely maintain a volatile trend at elevated levels, making a significant drop unlikely. However, weak terminal demand also prevents prices from sustaining continuous upward momentum, and after reaching higher levels, downward pressure is expected to reappear.