Liansu contracts open high and go high, downstream demand is expected to continue to recover

News: Shenhua coal chemical linear intraday bidding volume of 669 tons; The transaction volume was 569 tons, the high-pressure auction volume was 423 tons, the transaction volume was 251 tons, and the low-pressure bidding volume was 450 tons, and the transaction volume was 265 tons
.

According to senior analysts at ICIS, if the coronavirus outbreak is brought under control and the downstream industry will resume operations at a rate of 70-80% by the second half of March, then the demand for PE will be reduced by about 1.
5 million tons
.
The biggest impact was on packaging consumption, which lost an estimated 1 million tonnes of PE demand
.
China's PE consumption in 2019 is estimated at 35 million tons
.
About 18 million tons of plastic film used for packaging, accounting for 51%
of PE demand in 2019.

Agricultural film resumption enterprises accounted for 65%, +40%
week-on-week.
The operating rate of agricultural film enterprises increased to 19.
8%, +10.
5%
month-on-month.
The operating rate of shed film enterprises varies from 1-4
.
The operating rate of mulch film enterprises ranges from
5-9%.
In terms of orders, there was less follow-up of shed film orders, and more orders for mulch film
.
Production enterprises mainly
purchase raw materials on demand.
Packaging film resumption enterprises accounted for 25.
9%, +3.
7%
week-on-week.
There were fewer enterprises resuming work of sample packaging film, with an operating rate of 13.
3%, +2.
7%
week-on-week.
The largest packaging film production base in East China has not resumed work as expected, or continues to postpone the start until next week
.

The PE inventory of domestic polyethylene enterprises (oil + coal) in this cycle declined, down 4.
62%
from last week.
In terms of varieties, LDPE inventories rose 0.
02% from last week; HDPE inventories rose 1.
98% from last week; LLDPE inventories fell 12.
41%
month-on-month.
The total inventories of PE in the two barrels of oil declined, down 6.
67%
from last week.
Among them, Sinopec's PE inventory decreased by 11.
03% from last week; CNPC PE inventories fell 3.
79%
from last week.
PE inventories of coal-based companies rose 1.
83%
from last week.
Among them, LDPE inventory increased by 16.
50% from last week; HDPE inventory rose 22.
37% from last week; LLDPE inventories were down 9.
84%
from last week.

Spot market: Most domestic polyethylene merchants overreported, and only some high-pressure prices in North China fell
slightly.
At present, merchants are actively stockpiling goods, waiting for logistics to resume and downstream resumption of work
.
As of the noon close, the North China market adjusted 70-150 yuan / ton; East China market rose 150-400 yuan / ton; The South China market rose 100-450 yuan / ton
.
Warehouse receipt inventory: exchange warehouse receipts reported 2442 lots, intraday -0 lots
.

Main position: The top 20 long positions in the main contract are 167513 lots, +1994 lots, short positions are 226468 lots, -795 lots, net positions are -58955 lots, and the net position is reduced
.

Summary: The introduction of domestic stimulus policies weakened market panic, and two barrels of oil and petrochemical inventories began to accelerate their decline to 1.
32 million tons, down 100,000 tons
from the previous day.
In the spot market, Shenhua Polyethylene online auction commodities continued to pick up the day before the transaction, indicating that downstream demand began to recover
.
As the outbreak eases, downstream demand is expected to continue to recover
this week.
However, the social inventory of polyethylene is still in the historical high area, and the downstream resumption of work progress remains to be seen, it is expected that the trend of polyethylene will still be repeated in the short term, and the market will pay attention to the pressure
of 7150 yuan.
Operationally, it is recommended that investors wait and see for the time being
.