In January-February, Due To The Spring Festival Holiday, The Transaction Is Not Strong, The Market Performance Is Poor, The Price Range Oscillation.

The polyethylene market in the first quarter of 2022 revolved around "crude oil", "Russia and Ukraine" and "epidemic". In January-February, due to the Spring Festival holiday, the transaction is not strong, the market performance is poor, the price range oscillation.

By March, due to the escalation of the situation in Russia and Ukraine triggered the United States, Europe and other places on Russia sanctions, further exacerbating the global supply chain tensions, resulting in a surge in crude oil prices in the first quarter, polyethylene production costs are high, a number of domestic enterprises to stop or reduce the load running to reduce production costs losses, the market bullish sentiment is high, the market generally higher. But the high price of demand to follow up weak, coupled with the resurgence of the epidemic in many parts of the country, poor transport, demand is sluggish, the actual transaction temporarily no upturn.

So, what is happening in the polyethylene market this quarter, and listen to the data.

Crude oil, monomer

Influenced by the geopolitical situation and supply and demand tensions, the crude oil market has experienced historically rare high volatility, driven by it, ethylene monomer also rose sharply. Crude oil and monomer prices rose, directly leading to higher polyethylene costs and enhanced market price support, pushing up continuously.

With 1.35 million tonnes of domestic polyethylene units coming on stream in the first quarter of 2022, the market is under pressure to supply.

As crude oil prices rose faster, producers' profits compressed, so in March producers cut production to protect prices and the amount of overhaul losses increased significantly.

2022 Q1 overhaul losses were approximately 402,000 tonnes, an increase of 112.07% compared to the same period last year. The production reduction and parking maintenance of producers has to some extent weakened the impact of new production capacity, while easing the market supply and upstream inventory pressure.

Import and export

According to customs statistics, total PE imports from January to February 2022 were about 2,217,900 tonnes, a decrease of 13.46% compared to the same period last year. PE exports from January to February 2022 were about 53,100 tonnes, an increase of 29.76% compared to the same period last year.

The import window closed and the export window opened due to the widening domestic and international price differential. However, the profit of export was diluted to some extent due to the limitation of sea freight.

At the same time, the demand side of the transaction due to the epidemic weak background, the main domestic ports appear to plug the port, to a certain extent, also hindered the import.

Demand

In the first quarter of 2022, the overall downstream start general, orders are limited, the start lower than the same period last year, although March is the traditional peak season, the average start rate is only at 45%.

Affected by the Winter Olympics held environmental protection policy, overlaid with public health events, part of the logistics and transport disruptions, orders around the reduction, demand is weaker. In addition, in the case of raw material prices rose sharply, the downstream production enterprises profit damage, the willingness to prepare inventory is low, the raw material market support is limited.

Although the future trend of the market is unknown, but we can still be based on a variety of information, hope for the future market. Then, let the author to dig the second quarter may promote the polyethylene market to the good factors.

First, the situation in Russia and Ukraine is difficult to ease in the short term, the geopolitical attributes of oil prices are still strong, the cost will continue to remain high, the second quarter or there is some support for the polyethylene market.

Second, the domestic supply side will remain contracted. There are no new production units planned for the second quarter. Gulai Refinery's 300,000 tonnes LD/EVA line is expected to go into production in May, with EVA as the main output.

In the context of high costs and the downstream market has not yet effectively recovered, petrochemical plants have continued to reduce the negative operating plans, while the current petrochemical inventory digestion is obvious, the pressure on sales of producers has eased. According to incomplete statistics, the second quarter overhaul of polyethylene production capacity reached 3.82 million tons, excluding temporary parking overhaul of the device. Comprehensive view, the second quarter polyethylene market supply is expected to be tight.

Third, the second quarter "import window closed, export window open" pattern is expected to continue. In addition, shipping problems will continue to affect imports and exports, the epidemic under the port of Seaport on imports of short-term constraints, high shipping costs are constrained exports. Imports in the second quarter may remain at a low level, and exports are expected to remain at the current level under the premise that shipping costs remain high.

Fourth, demand is weak in the example of the year, the peak season is about to pass, and the current under the influence of the epidemic, North China, East China regional logistics and transport obstruction, downstream new orders are not good, the start of some decline. But after the health event is expected to usher in a recovery in terminal demand, when the downstream demand or a boost.

To sum up: in summary, the second quarter polyethylene prices still have the possibility of higher, but the specific still need to pay attention to the cost side of crude oil and the direction of the domestic epidemic.