Polyethylene: the release of production capacity to cool the market

Since the beginning of the year, new production capacity has been released one after another, and the domestic polyethylene market has been declining after the Spring Festival
.

Large increase in production capacity

Jin Lianchuang analyst Li Xuehan said that since the beginning of this year, Yanchang Yuneng Chemical’s 300,000 tons/year low-density polyethylene, Ningbo Huatai Shengfu full-density polyethylene 400,000 tons/year, Lianyungang Petrochemical 400,000 tons/year high-density polyethylene and Heilongjiang Haiguolong Oil’s 400,000-ton/year full-density polyethylene plants have been put into operation one after another.
Domestic polyethylene supply has increased substantially, but the demand has not been followed up in time, which has pressured the market and kept prices down
.

Entering June, the polyethylene market is still in a downward channel
.

According to industry insiders, Qilu Petrochemical's 120,000 tons/year full density polyethylene, Fushun Petrochemical's 140,000 tons/year full density polyethylene and Lanzhou Petrochemical’s 200,000 tons/year low-density polyethylene devices are currently under maintenance.
Part of Yangzi Petrochemical's equipment has been restarted.
Jilin Petrochemical and Shenhua Xinjiang equipment are still under overhaul.
The overall maintenance volume has decreased compared with the previous period.
The polyethylene market supply pressure continues to increase, and the price increase space is limited
.

　　In addition, this year is expected to release 5.
8 million tons of production capacity.
If all of these production capacities are released as scheduled, this year's polyethylene market will continue to operate under pressure
.

　　Insufficient cost support

　　In terms of upstream raw materials, the ethylene market has fallen from a previous high of US$1,200 CFR Northeast Asia to US$955 at present, a drop of US$245, a drop of 20%
.

　　According to industry insiders, the situation of the main polyethylene demonstrations is not good, and the industry mostly holds pessimistic expectations.
The enthusiasm for purchasing raw materials has weakened and most of them are waiting for lower prices
.

　　According to Chen Hongxia, an analyst at Zhongyu Information, statistics show that the price of naphtha in Japan was US$642.
875 CFR Japan, while the price of ethylene was US$960/ton CFR Northeast Asia during the same period.
The price difference between ethylene and naphtha was US$317.
125, down 37.
14% from the previous month.
A year-on-year decrease of 12.
85%, which is lower than the one-year average of US$399.
398
.

　　Not only that, the negotiating atmosphere in China's ethylene market is relatively empty, and some far-month contracts are negotiated at low prices.
The continuous decline in US ethylene prices may trigger a correlation effect
.

　　Regarding the market outlook, traders said that the current price of ethylene is relatively low, and it is difficult to form a strong support for polyethylene on the cost side
.

　　Weak demand

　　Insufficient demand is an important factor in the sluggish polyethylene market
.

　　According to Wang Chunming, general manager of Shandong Ruiyang Chemical Trading Co.
, Ltd.
, the overall operating rate of agricultural film nationwide is about 10%
.

　　Wang Chunming said that due to the severe epidemic situation in many Southeast Asian countries and China's traditional demand low season, terminal demand is still sluggish
.