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Analysis of China domestic PE market supply

2023-06-05 08:32:39 CCFGroup

Since the second quarter, PE market has maintained in weak consolidation. Although the market moves up occasionally, the overall impact on the market is limited due to the small increase and short duration.  From the perspective of market supply and demand, the short-term market is still weak due to the poor supply and demand. Under the recognized off-season demand, can the supply side give a certain direction in the future market?

 

China domestic production

Since a total of 2.2 million tons plants of PetroChina Guangdong PC, Sinopec Hainan and Shandong Jinhai Chemical from March to April, there are no new plants in the medium term (May-Aug). The 400kt/year HDPE plant of Ningxia Baofeng III may be put into production at the end of second quarter and the beginning of fourth quarter. Excluding the impact of the new device, then the biggest problem lies in the maintenance plants.

 

According to the following figure, the total production capacity of the maintenance plants is 4.20 million tons.

 

Enterprises Production Capacity (kt/year) Note
Shenyang Chemical LLDPE 100 shut on Oct 15, 2021
ZRCC HDPE 300 shut on Mar 5, 2022
Haiguolongyou HDPE/LLDPE 400 shut on Apr 6, 2022
Wanhua Chemical HDPE 350 shut on Nov 12, 2022
Wanhua Chemical HDPE/LLDPE 450 shut on Apr 29, and may restart on end May
PetroChina Fushun PC old HDPE 140 shut on Apr 6
Shenhua Ningxia Coal II HDPE/LLDPE 450 shut on Apr 19 for around a month
PetroChina Daqing PC HDPE #2 80 shut on Apr 27, and may restart on end May
Ningxia Baofeng Energy HDPE/LLDPE 300 shut on May 4
Zhejiang Petroleum & Chemical  II LLDPE/HDPE 450 shut on May 10 for around 15days
Zhejiang Petroleum & Chemical  II HDPE 350 shut on May 15, and may restart on end May
Sinopec Maoming PC LDPE 250 shut on May 14 for short maintenance
Sinochem Quanzhou HDPE 400 shut on May 15
PetroChina Dushanzi PC old HDPE/LLDPE 100 shut on May 15
  4120  

 

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At present, plants shut for mainteance intensively. Since May, China domestic PE plant operating rate has gradually declined. On May 15, China domestic PE plant operating rate is assessed at 81.77%. In the later period. If Secco, Pucheng Clean Energy, PetroChina Lanzhou PC and, PetroChina Daqing PC continue to shut for maintenance, the overall operating rate may continue to decline.

 

Imports:

In the first quarter of 2023, China imported 3.2552 million tons of PE, a decrease of 8.82% y-o-y, China imported 1.0285 million tons in January, 1.1195 million tons in February and 1.1072 million tons in March.

 

 

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According to the data of the past two years, the fluctuation range of China's monthly PE imports is getting smaller and smaller, basically controlled in the range of 1-1.2 million tons. With the launch of several China domestic refinery and chemical integrated complex, the dependence on imports has obviously weakened, and imported products are also more transferred to high-tech materials and special materials, and the import volume tends to be more stable. In addition, the current CFR China market continues to remain weak, and the price spread between RMB market and CFR China market has narrowed. The market fluctuates within small range, which leads to the overall import volume also tends to be stable.

 

Generally speaking, with the stable output of China domestic new plants, the change mainly comes from the reduction of plant maintenance in the second quarter. However, in terms of the current supply and demand pattern, the overall supply still increases due to the early new startups. Moreover, demand is weak amid the slack season, and the overall market may remain poor.

 

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