Review of imported PE market in H2 2022

In the second half of 2022, imported PE market declined first and then shivered. The market moved down in Jul-Aug, and fluctuated widely in Sep-Dec.

In July, the crude oil plummeted, new offers of the suppliers declined for several times, and the market price dropped evidently under the collapse of cost. However, as imported PE market price was higher than the RMB market, downstream market was sluggish and the enquiry prices were lower than the market offers, and the transaction was thin.

In August, new offers of the suppliers declined for several times, and traders offered lower. RMB futures-spot market was relatively weak, suppressing the market mentality. Downstream was not active in purchasing. Then, RMB against USD depreciated, most traders purchased low-price cargoes on need.

In September, boosted by the upward RMB market, suppliers had published their new offers at higher price, and traders offered higher. Downstream enquiring atmosphere was lukewarm, most traders were standing watching while some stocked up for the Mid-autumn festival holiday. In the second half of the month, the market mentality was relatively weak, and traders offered lower gradually. In addition, RMB against USD continued to depreciate, and traders made transactions with slightly lower price. Downstream low-price enquiries increased, some traders purchased before the National Day holiday and market trading was stable.

In October, during the National Day holiday, market talking sentiment was weak. However, during the holiday period, crude oil rose sharply, which supported the CFR PE market. Then, RMB futures market fell, new offers of suppliers declined and traders offered lower. Moreover, due to the continues depreciation of the RMB, traders' offers further weakened in order to balance the price spread between RMB market and CFR China market. Downstream demand continued to be weak, and transaction was poor.

In November, suppliers offered lower and RMB futures-spot market declined, which depressed the CFR China market and price inched down as a whole. Then, RMB market went up and RMB appreciated, CFR China market rebounded and the price spread between RMB market and CFR China market narrowed. RMB price of some grades was even higher than that of CFR China market price, and trading sentiment was lackluster. In late Nov, market turned soft again.

In December, RMB market price in the early-to-mid Dec was strong, which supported the CFR China market. Due to the appreciation of the RMB, the price spread between RMB market and CFR China market narrowed slightly. But in the later stage, due to the outbreak of the epidemic in various places of China, downstream demand was poor. Market transaction for high-price goods was weak, and market price slipped lower.

From the perspective of market characteristics, CFR China market in the second half of the year has the two main characteristics:

1. The overall import volume has recovered.

From July to November in 2022, China imported a total of 5.8076 million tons of PE, with an average monthly import volume of about 1.1615 million tons, while the average import volume in the first half of 2022 was only 1.0946 million tons. It can be seen that the overall import volume in the second half of the year increased slightly, and the monthly import volume from August to November was above 1.1 million tons. The increase in import volume is also a manifestation of the gradual recovery of downstream purchasing confidence under the strengthening of the market price.

2. The market is greatly affected by the exchange rate.

In the second half of 2022, CFR China market was greatly affected by the exchange rate. Basically, the monthly trend was not only affected by the RMB futures-spot market, but also partly affected by the exchange rate. This is also the response of the market to balance the price spread between RMB market and CFR China market. Especially from July to October, due to the obvious depreciation of the RMB, CFR China market price declined as a whole, and in November and December due to the appreciation of RMB, market price picked up slightly.