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China PE Market will Continue to be Dominated by an Upward Trend

May 9, 2024

Latest company news about China PE Market will Continue to be Dominated by an Upward Trend

On May 5th, the General Plastics Index was 830 points, unchanged from yesterday, a decrease of 29.12% from the highest point in the cycle of 1,171 points (2021-10-14), and an increase of 27.11% from the lowest point of 653 points on April 6th, 2020. (Note: The cycle refers to 2011-12-01 present)

In April, the general plastic industry saw an overall red trend. After the Qingming Festival, the general material consumption market has gradually taken over the pattern of downstream resumption of work in March. At the same time, March and April are also the peak seasons for some plastic products such as PE. Coupled with the release of pre holiday stocking demand during the May Day holiday, multiple consumer side benefits are added to the April rigid demand base. The strengthening of international crude oil at the beginning of the month in the remote upstream injected strong cost support into the general plastic industry. Except for EVA, the general material market has shown a positive trend during the month, boosted by demand and cost.

Fundamentals: At the beginning of the month, driven by the positive rise in crude oil prices, the cost side of PE supported high enterprises. In the middle of the month, the industry ushered in a spring inspection, and petrochemical enterprises concentrated their parking and maintenance, significantly relieving the pressure on the supply side. The flow rate of market goods is still acceptable, and pre holiday packaging film stocking also increases the heat of on-site trading.

Leading factor: PE supply tightened in April, leading to higher costs. At the same time, it is in the second half of the peak season for downstream agricultural film demand, with a combination of bullish fundamentals driving the rise of PE.

Agricultural film is gradually entering the off-season in the future, and there is also an expectation of a decrease in packaging film production, which weakens support for the PE market. However, the industry is still in a period of concentrated maintenance, and there is an expectation that supply will continue to narrow. After the holiday, the PE market may still be dominated by the above behaviors, but the upward space may be limited.

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