1、 Review of the PE market situation in May

In May 2024, the PE market showed a fluctuating upward trend. Although the demand for agricultural film declined, downstream rigid demand procurement and macro positive factors jointly drove the market up. Domestic inflation expectations are high, and linear futures have shown strong performance, driving up spot market prices. At the same time, due to the major overhaul of facilities such as Dushanzi Petrochemical, some domestic resource supplies have become tight, and the continuous rise in international USD prices has led to a strong market hype, further driving up market quotations. As of May 28th, the linear mainstream prices in North China reached 8520-8680 yuan/ton, while the high-pressure mainstream prices were between 9950-10100 yuan/ton, both breaking new highs in two years.

2、 Supply Analysis of PE Market in June

Entering June, the maintenance situation of domestic PE equipment will undergo some changes. The devices undergoing preliminary maintenance will be restarted one after another, but Dushanzi Petrochemical is still in the maintenance period, and the Zhongtian Hechuang PE device will also enter the maintenance phase. Overall, the number of maintenance devices will decrease and the domestic supply will increase. However, considering the gradual recovery of overseas supply, especially the weakening of demand in India and Southeast Asia, as well as the gradual recovery of maintenance in the Middle East, it is expected that the amount of imported resources from overseas to ports will increase from June to July. However, due to the significant increase in shipping costs, the cost of imported resources has risen, and prices are high, the impact on the domestic market is limited.

3、 Analysis of PE market demand in June

From the demand side, the cumulative export volume of PE from January to April 2024 decreased by 0.35% year-on-year, mainly due to the increase in shipping costs, which hindered exports. Although June is a traditional off-season for domestic demand, driven by high inflation expectations and the continuous rise in previous market conditions, the market’s enthusiasm for speculation has increased. In addition, with the continuous development of a series of macro policies, such as the Action Plan for Promoting Large scale Equipment Renewal and Consumer Goods Swapping for New issued by the State Council, the trillions yuan issuance arrangement of ultra long-term special treasury bond issued by the Ministry of Finance, and the central bank’s support policies for the real estate market, it is expected to have a positive impact on the recovery and development of China’s manufacturing industry and structural optimization, thus supporting the demand for PE to a certain extent.

4、 Market trend prediction

Taking into account the above factors, it is expected that the PE market will exhibit a long short struggle in June. In terms of supply, although domestic maintenance equipment has decreased and overseas supply has gradually resumed, it still takes time to realize the increase in imported resources; In terms of demand, although it is in the traditional off-season, with the support of domestic macro policies and the promotion of market hype, the overall demand will still be supported to some extent. Under inflation expectations, most domestic consumers continue to be bullish, but high priced demand is hesitant to follow suit. Therefore, it is expected that the PE market will continue to fluctuate and consolidate in June, with linear mainstream prices fluctuating between 8500-9000 yuan/ton. Under the strong support of petrochemical mismatch maintenance and willingness to raise prices, the upward trend of the market has not changed. Especially for high-voltage products, due to the impact of subsequent maintenance, there is a shortage of resource supply to support, and there is still a willingness to hype up prices.