LLDPE: IT IS STILL A SHOCK TREND FOR THE TIME BEING

First of all, China's polyethylene market is about to usher in a seasonal replenishment period for downstream companies. At the same time, due to the huge increase in ocean freight and the shortage of containers, the price gap between internal and external polyethylene has widened, and the difficulty in increasing the volume of polyethylene imports in the future will become the driving force for the potential increase in futures prices. At present, the start of agricultural film companies is slowly picking up. Although the number of new orders is lower than in previous years, market demand in the medium term will continue to pick up. It is expected that the short-term LLDPE is still in a volatile market, and it may gradually strengthen in the medium term.

Second, in the past two months, there have been two centralized replenishments in the spot market, but they have failed to provide substantial support to the market. Due to the prolonged downstream procurement cycle, a low inventory operation mode has been adopted. From the perspective of the supply side, the supply side is further put into production, and the supply of PE will increase significantly in 2021, and the substantial increase in supply will cause the basis to continue to be weak. Only after the demand expansion in the second half of the year, the terminal industry expands its own inventory level, can gradually absorb the current pressure on production capacity. With the accumulation of orders for agricultural film and other related industries, we should not be too pessimistic about the second half of the year.

Third, fiscal easing, monetary easing, and inflation are major trends, and there should not be too much hesitation. In the off-season of the first half of 2021, terminal demand will not be able to expand further, leading to a decline in terminal operating rates and reduced stockpiling, which may cause commodity prices to weaken in the second quarter. However, the downstream related demand of PE remains stable in the second half of the year, and the order execution period in the second half of the year will drive PE to pick up and strengthen.


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