Review of imported PE market in 2021

In 2021, the overall imported PE market showed an "M" trend, which can be basically divided into 4 stages:

1. From January to March, market price went up on the whole.

At the beginning of 2021, new offers from suppliers dropped, and market price moved lower. Under the unclear impact of the epidemic on logistics and downstream operations, downstream demand was limited and market players took a wait-and-see attitude. But then, supported by rising RMB market and stock up demand, market price rose slightly, especially during the Spring Festival holiday when a large number of plants closed under the cold wave in North America. There were also some plants shut for maintenance in the Middle East, resulting in a relatively tight global supply and soaring overseas market price. RMB market price was relatively low in the global market, traders in the Middle East, Japan, South Korea and other countries tended to sell goods to higher-priced places such as Europe and the United States. Supported by the cost, most traders offered higher accordingly.

2. From April to mid-June, imported PE market dived.

Since new offers from suppliers maintained high and the decline of the US dollar was less than that of RMB, the price spread between China domestic market and PE CFR China market widened and traders offered lower to sell goods. China PLAS was held, and the market was in strong wait-and-see stance. Then, the market fell sharply, especially LDPE. In mid-May, due to the gradual easing of the shortage of goods in the previous period, overseas trading pressure was relatively heavy, new offers from suppliers continued to decline, and traders offered lower.

3. From late June to early October, imported PE market rose sharply.

Due to the rising RMB price, PE CFR China market had been boosted. Crude oil price surged, and suppliers had published their new offers at higher price. Some trader were reluctant to sell goods at previous lows, resulting in high price and limited offers on the market, especially LDPE which was supported by the tight supply and market speculative behaviors. Until the National Day, the macro environment was very good and market sentiment was active after the holiday, and new offers from supplies increased significantly. In addition, the price difference between RMB market and imported PE market narrowed, traders offered higher and downstream atmosphere was good.

4. From mid-October to December, the market showed a downward trend as a whole.

RMB market fell sharply due to the national control of coal prices, imported PE market sentiment had been affected and most traders offered lower. In late November, the overnight crude oil plunged, and further weighed on the PE CFR China market. Market transaction was thin.

In addition, there are several characteristics of the imported PE market in 2021:

1. LDPE was still stronger than LLDPE and HDPE

Since the beginning of 2021, the imported LDPE price had always been higher than the imported LLDPE and HDPE, and the price spread was basically controlled within the range of 200-400yuan/mt. The main reasons are as follows: 1. the proportion of LDPE plants at home and abroad is much lower than that of LLDPE and HDPE. Therefore, when there is overcapacity in LLDPE and HDPE, LDPE supply is still tight and the price is naturally higher than that of other products; 2. In recent years, the price of EVA is more advantageous, and the demand is much stronger than that of LDPE. Take China as an example, LDPE/EVA plants are mainly producing EVA, such as Jiangsu Sailboat and Shaanxi Yanchang ChinaCoal II. Sinopec Yanshan PC also mainly produces EVA most of the time, which to a certain extent pushes up the price of LDPE to a certain extent.

2. The import volume had decreased significantly.

From January to November 2021, China imported 13.5011 million tons of PE, a year-on-year decrease of 20.97%. Monthly imports in 2021 were basically between 1.0-1.7 million tons, with a minimum of 1.0377 million tons in June and a maximum of 1.6554 million tons in March. In 2020, monthly imports were between 1.35-1.85 million tons, with a low of 1.3638 million tons in April and a high of 1.8297 million tons in June.

3. RMB market price was lower than the imported PE market for a long time.

In 2021, RMB market price was basically lower than the imported PE market. Taking LLDPE as an example, it is found that the imported LLDPE price was basically higher than the RMB market for a long time, and the price spread was around 100-800yuan/mt. Downstream purchasing sentiment towards the US dollar market was relatively sluggish, most market participators prefer to purchase yuan-denominated materials and get the tax refunded, which further weakened the imported PE market.