[ Plastic Machinery Network Market Overview
] The overall polyethylene market in 2019 is on a downward trend, mainly due to the sharp contradiction between the supply and demand sides. In recent years, the process of adding new capacity at home and abroad has accelerated, national output and imports have both risen, and the market supply is sufficient. Of course, demand is still mainly rigid. Affected by environmental protection and Sino-US trade frictions, some regions have stopped production and restricted production to varying degrees. Demand has grown slowly, contradictions between supply and demand have intensified, and prices have been under pressure throughout the year. Taking the China Plastic City market as an example, the average annual price of polyethylene (PE) is about 8292 yuan / ton, which is 1942 yuan / ton lower than last year, a decline of 18.98%. Among them, low-density polyethylene ( LDPE
) was 8400 yuan / ton, down 1773 yuan / ton, a decrease of 17.43%; linear low-density polyethylene ( LLDPE
) was 7,977 yuan / ton, down 1,823 yuan / ton, or a decrease of 18.60 %; High-density polyethylene (HDPE) was 8372 yuan / ton, down 2073 yuan / ton, a drop of 19.85%.
The upstream ethylene monomer fluctuated greatly
Overall ethylene prices in Asia showed an "N-shape" trend in 2019. The average annual price of ethylene in CFR Northeast Asia was US $ 900.2 / ton, a decrease of US $ 354.3 / ton compared to the same period last year, a year-on-year decrease of 28.2%. The average annual price of ethylene in CFR Southeast Asia was US $ 833.2 / ton, a decrease of US $ 321.6 compared to the same period last year. / Ton, a year-on-year decrease of 27.8%.
Abundant supply hits record high
China's polyethylene capacity is further expanded in 2019. Three new units of Jiutai Energy, Zhongan United and Ningxia Baofeng Phase II have been put into operation. In 2019, China ’s polyethylene capacity has expanded to 930,000 tons, and the production capacity has reached 19.488 million tons. During the year, the operating rate of domestic petrochemical production enterprises was between 88% -97%, which was slightly higher than in 2018. As a product with an import dependency of nearly 50%, polyethylene supply research is also indispensable. China's PE imports in 2019 maintained a high growth since 2017. According to statistical data analysis, from January to November 2019, China's total PE imports were about 15.1393 million tons, an increase of 17.66% over the same period last year. Among them, the total amount of LDPE imports was about 3.126 million tons, a year-on-year increase of 15.73%; the total amount of HDPE imports was 7.295 million tons, a year-on-year increase of 17.26%; the total LLDPE import amount was 4,755,200 tons, a year-on-year increase of 19.60%.
Reduction of petrochemical maintenance losses in overhaul years
As a small year for maintenance in 2019, the petrochemical equipment and maintenance time for maintenance have been significantly reduced compared to 2018. According to incomplete statistics of China Plastics, in 2019, polyethylene involved parking inspection and maintenance capacity of approximately 13.132 million tons, and a total of 32 petrochemical companies and 66 production lines stopped for maintenance and repair (excluding the old full-density plant of Lanzhou Petrochemical for long-term parking), and the total loss About 11.563 million tons, a year-on-year decrease of 36.55%.
Downstream demand slump, limited demand support
The main downstream applications of polyethylene in China are LLDPE and LDPE, which are packaging film products. HDPE is relatively dispersed, mainly in pipes, hollow containers, injection products and films. In 2019, the price of agricultural film products showed a weak and volatile trend, mainly affected by the price of polyethylene raw materials. From the perspective of the operating rate of agricultural film in 2019, there was no significant increase or lower than in previous years, and the price of agricultural film was not particularly good. The performance shows the sluggish overall demand of the industry. In other downstream product industries, due to the impact of macro and environmental issues, the order volume of factories has shrunk, and the end-use policy has been adopted.
Looking forward to 2020, analyze the main factors affecting market conditions
Upstream: In 2020, non-OPEC supply will continue to grow at a medium and high speed since 2018, increasing by 2 million barrels per day compared to the same period last year. North America, Brazil and the North Sea region will be the main sources of supply increase. On the demand side, factors such as a new round of monetary easing cycles, new refining capacity, and new IMO regulations will drive demand growth. However, due to the uncertainty of the macro economy in 2020, the risk that oil demand will grow faster than expected remains.
On the supply side: Pressure will continue to increase in 2020. On the one hand, domestic production has once again entered the peak period of production, especially with the rise of large-scale refining and petrochemical industry into a new round of production tide, petrochemical and coal chemical industries compete to launch new production capacity, and supply pressure will continue to be maintained; The planned overhaul capacity is relatively small, the market supply will be very loose, and the profit margins of manufacturers will continue to shrink. (For the table of PE's estimated new capacity in 2020, please refer to the article “Preparing for the future: 2020 is the first to see new capacity added”)
On the demand side: a series of policies such as loose monetary policy, China ’s increased infrastructure investment, economic growth, and tax and fee reductions will drive demand growth, but there are many global uncertainties and the overall economic situation is difficult to shake off the downturn. It is expected that It may be that the market's hype is weak, mostly based on rigid demand, and demand growth is expected to be slow, and the oversupply pattern is difficult to change.
In general, the polyethylene market is still worrying in 2020, and the pressure on the supply side, whether it is domestic or imported, is still not small. The rigid demand at the demand side is steadily declining, and the contradiction between supply and demand is prominent. It is expected that the polyethylene market will still face the risk of decline in 2020.