Polyethylene market performance is difficult to say optimistic

- Feb 12, 2019-

After the sharp decline in October-November 2018, the LLDPE futures of the Dachshund ushered in a bottom-up rally from December 2018 to January 2019. As of January 30, the futures contracted the May contract closing price. 8735 yuan / ton, compared with the low point at the end of November 2018 has rebounded 7%. At the current node, the rebound in LLDPE futures prices may be nearing completion, and the market is still at risk of weakening again.

From a fundamental point of view, the driving force for the rebound of the previous varieties mainly comes from the repair of pessimistic expectations, the temporary reduction of import supply, and the replenishment of some middle and downstream enterprises, and these logical market outlooks are mostly difficult to continue.

First of all, the current LLDPE current price difference is close to Pingshui, and the pessimistic expectations contained in the pricing are not much left. Secondly, from the customs data, the arrival of Iranian PE in Hong Kong in the fourth quarter is one of the important factors supporting domestic PE prices. According to the latest news, this obstacle has been basically solved. The delay in the supply of goods in the early stage will be concentrated in Hong Kong, and subsequent shipments will also be Back to normal. Finally, petrochemical inventories fell rapidly after December. On the one hand, some middle and lower reaches of the destocking behavior in October-November 2018 were partially replenished. On the other hand, it was also needed for regular stock preparation before the Spring Festival. Sexual doubts.

Under the current macro environment and new capacity projections, although the middle and lower reaches of the inventory may still not be high, but for the time being can not find its incentive to improve the raw material inventory cycle.

In addition, it is worth mentioning that the maintenance plan of domestic PE equipment will be significantly reduced by 2018 before May. If the external factors are moderated, the profit at the supply end may be greater than the demand for the finished products at the current price. Therefore, under the current situation that the futures 05 contract has already increased the import cost, the pressure will gradually increase. It is recommended to treat the rallies in a short-selling manner, and the bottom supports the dynamic reference return price.

Regarding the risk, the increase in the thickness of the national standard of the mulch film may be a major concern for the short-term demand of LLDPE. On the one hand, there is still a period of time from the start of the peak season, and on the other hand, driven by the cost-saving pursuit of profit, the effect of the new thickness may be In the light of this, the risk is still relatively controllable.