Since the Spring Festival, the domestic petrochemical inventories have been accumulating significantly, and some downstream plants have started late, making the overall price of plastics relatively weak. As of March 8, L1805 closed at 9,305 yuan/ton, which was more than 800 yuan/year lower than during the year. t. The demand for the later period will continue to recover, while the reduction of recycled materials will be favorable. The plastics are expected to stabilize in the short term.
Downstream operating rate is expected to rebound
Due to the Spring Festival holiday, the downstream PE industry began to decline sharply in February. According to the data, as of February 22, the operating rate of the film industry was only 30%, which was 23% lower than that at the beginning of February; the start of the packaging industry fell 32% compared to the beginning of February. With a percentage point to 30%, the operating rate of film, monofilament, and hollow industries dropped by over 20 percentage points. However, with the end of the Spring Festival holiday, the downstream factories resumed production in succession, which led to a rapid recovery of the downstream PE industry.
As of March 8th, the operating rate of plastic sheeting industry increased to 47%, the start of the packaging industry increased by 23% from the low point of the year to 53%, and the production of films, monofilaments, and hollows increased by more than 10%. Currently, there are many downstream factories. Production has already begun. Meanwhile, the traditional peak season has come. It is expected that the construction of downstream industries will be further enhanced in the near future, which will help boost PE demand.
The picture shows the farming film industry operating rate statistics
Recycled material is greatly reduced
Although the domestic PE petrochemical inventories increased significantly during the Spring Festival, many low inventory operations were maintained before the holiday so that the post-holiday stocks did not accumulate in excess of expectations. Instead, they were at a historically high level. As the holiday season ended, petrochemical inventories began to decline. Data show that As of March 2, PE petrochemical stocks reached 425,000 tons, which was 6.59% lower than the post-election high. Currently, almost all of the downstream plants have already entered the market, and it is expected to increase the load for start-up of high-season factories. At the same time, as the pre-holiday downstream has not concentrated a large number of stocks, It is expected that the petrochemical inventories will continue to decline rapidly, and it is recommended to pay attention to the downstream receiving capacity.
As environmental protection continues to increase, domestic recycled materials continue to be squeezed. According to statistics from Zhuochuang, domestically produced recycled PE was 112,000 tons in February this year, a year-on-year decrease of 43.58%. Customs data show that domestic imported recycled PE in January 2018 Only 14,500 tons, a year-on-year decrease of 92.02%.
Due to the continued implementation of the policy of restricting the import of used materials, it is expected that imported renewable PE will continue to maintain a relatively low level. Judging from the approvals for the first seven batches of waste plastics that have been approved, the total amount of approved imports is 25,281 tons, which is a substantial decrease from the same period of last year. The ethylene polymer scraps and scraps account for only a small part of them. The rapid reduction of recycled materials will continue to favor the PE new material market in the short to medium term.
Crude oil pressure callback
Since the end of January, international oil prices have rapidly declined. This is mainly due to the increase in U.S. crude oil production and inventories pressure. After mid-February, tensions in the Middle East and supply of oil fields in Libya have been interrupted. The superimposed oil producers insisted on reducing output and boosting oil prices. Slow rises. The recent bearish gains in production and stocks have once again caused oil prices to oscillate.
Looking to the market, although OPEC and Russia’s determination to cut production forcefully support the formation of international oil prices, the number of drilling rigs in the United States continues to increase and the pressure on crude oil inventories has increased. In addition, US refineries will gradually enter the maintenance season, and the performance of crude oil demand is not optimistic. Under the pressure of multiple negative factors, it is expected that crude oil or weaker operation will bring certain risks to the stabilization or rebound of plastic price.
After the Spring Festival holiday, the downstream construction started to pick up quickly, and in the peak season, the downstream construction is expected to continue to increase. In addition, the substantial reduction in recycled materials for the new material market still exists. Although the post-holiday inventory practices have accumulated significantly, but the overall history This is a medium level, and it has started to decline. Under the support of various favorable factors, the bearish short-term is not excessively bearish on plastics. It is worth noting that the demand in the peak season has been falsified, and the crude oil continues to decline substantially.