August 07, 2024 – Despite a decline in the operating rate of domestic polyethylene (PE) producers in July due to the deepening of summer, production volumes unexpectedly increased, reaching 2.1973 million tons and achieving a slight growth of 0.77% compared to the same period last year.
During the month, several large petrochemical enterprises partially shut down for scheduled maintenance, resulting in some loss of production capacity. However, overall output still rose due to the extra days in July. Notably, these maintenance works are expected to conclude by early August, indicating a potential further increase in domestic PE supply for August.
According to AsiaMB, downstream factories’ demand shows mixed trends. On one hand, the agricultural film industry has seen a significant rebound in demand. On the other hand, sectors like piping have experienced weaker demand due to seasonal factors. As the traditional peak season, known as “Golden September,” approaches, more factories are anticipated to start stocking up in mid-to-late August, potentially driving up market prices.
Regarding price fluctuations, PE market prices are expected to follow a trend of initial decline followed by an increase in August. Specifically, the mainstream price of linear low-density polyethylene (LLDPE) is projected to fluctuate between 8,150 and 8,700 yuan per ton. With the arrival of the peak demand season, the market’s demand for spot goods will gradually increase, supporting a price rebound.
In summary, despite facing pressure from a reduced operating rate in July, domestic PE production maintained a growth trend. Demand shows mixed patterns. Looking ahead to August, the market is expected to see a price trend of initial decline followed by an increase. As the peak season approaches and factory orders increase, the market will witness a wave of inventory replenishment in late August, supporting a price rebound. However, supply-side pressures may limit the upside potential for prices.