Demand is there to support PE need not be too pessimistic

- Apr 12, 2019-

Supplies are plentiful at home and abroad, while sinopec and port inventories remain high.

In accordance with the convention, the plastic products enterprises in April than in March is still expected to further increase, PE prices in China is now close to nearly three years low, PE prices are also supported by the bottom.

In addition to the macro short-term good, the country to expand loans to small and micro enterprises and other factors, the industry need not be overly pessimistic, in April to pay close attention to the market low-end supply volume.

In the first quarter of 2019, China's PE construction rate increases month by month and maintains above 95% high-load operation. In terms of subdivision, LDPE construction starts at 85-91%, LLDPE construction starts at 99%-102% and HDPE construction starts at 94-103%.

Overall, the domestic PE supply is adequate, the domestic market supply in the face of market pressure.

Domestic supplies were plentiful, imports were also up sharply, and both sinopec and port inventories remained high.

In mid-to-late march, petrochemical inventories remained at the high level of 930-1.01 million tons, slightly higher than the level of 910-990,000 tons in the same period of 2018.

PE port inventory ranges from 370,000 to 410,000 tons, which is slightly lower than the 400,000 to 440,000 tons in the same period of 2018, but its inventory is still at a high level.

Though as supply continues to grow, two oil normalized gravity up inventory is understandable, but in recent years, domestic and foreign supply pressure lead to increasing competition in the market, at the end of 2018, petrochemical, and part of the coal enterprise said 2019 will remain light warehouse operation idea, obviously, inventories remain high and domestic upstream and middle link light warehouse operation mentality is not ideal.

Under the pressure of supply, most petrochemical companies and agents are in a positive state of stock reduction. PE prices in China are under pressure. Taking China petroleum corporation 7042 in the north China market as an example, it dropped to 8,650 yuan/ton in late march, and its price is basically close to a three-year low.

From the perspective of terminal demand, in March 2019, most of the domestic downstream products start to work has been improved, among which the increase of agricultural film start load * is obvious, followed by the pipe material.

Compared with the same period in 2018, the start rate of various industries is higher than that of drawing and injection molding, and the pipe material is lower than that of the same period last year. Other packaging film, hollow and other industries have little change.

By convention, plastic products enterprise starts in April from march is still expected to further enhance, the price of China's PE is close to a low level in nearly three years, despite a hierarchical library demand reduction, PE also have support at the bottom of the price, based on the macro short-term positive, driven by factors such as the national expansion of small micro enterprise loans, companies without transition pessimistic, pay close attention to market of low-end supply volume surged in April.