[pe daily review] trading sentiment weakens, spot prices from holders show some easing

1. Summary of Today

①. Russia's previously attacked port has returned to normal loading operations, easing geopolitical concerns and leading to a drop in international oil prices. NYMEX crude oil futures for the December contract fell by $0.18 per barrel to $59.91, a decrease of 0.30% compared to the previous period; ICE Brent crude futures for the January contract fell by $0.19 per barrel to $64.20, a decrease of 0.30% compared to the previous period.

②、 The HD PE market price fluctuated between -18 to 2 yuan/ton, the LDPE market price decreased by 8 yuan/ton, and the LLDPE market price decreased by 3 yuan/ton.

2. Spot Overview

Today, the spot market for polyethylene in China is experiencing weak fluctuations. Due to the decline in futures, market trading sentiment has weakened, and holders are slightly loosening their spot quotations. Currently, there is still supply pressure in the market, while on the demand side, there is an expectation of weakening. The HDPE market price fluctuated by -18 to 2 yuan/ton, the LDPE market price by -8 yuan/ton, and the LLDPE market price by -3 yuan/ton.

3 Spot-Futures Basis

The main LL contract fluctuated downward, opening at 6,851 yuan/ton and closing at 6,785 yuan/ton as of 15:00, which is 65 yuan/ton lower than the previous settlement price. The trading volume was 260,600 lots, and the open interest was 548,300 lots. Today's futures-spot basis was 35 yuan/ton, an increase of 38 yuan/ton compared to the previous working day.

4 Production Status

Capacity utilization is== 82.24% changed to 82.88%. Oil-based cost is 7,293 yuan/ton; oil-based profit is -393 yuan/ton; coal-based profit is -43 yuan/ton.

Picture 3   Domestic Polyethylene Capacity Utilization Trend	Picture 4   Domestic polyethylene profit and price comparison (yuan /ton)
Data Source: Longzhong Information	Data source: Longzhong Information

5 Market sentiment

Table 2. Sentiment Expectations of Domestic Polyethylene Upstream and Downstream Practitioners

6. Price Prediction

On the supply side, although some major maintenance facilities have gradually resumed operations, there has been an increase in temporary shutdowns recently, resulting in little overall change in market supply. On the demand side, downstream industries are gradually entering the off-season, with sectors such as agricultural film and pipe materials being particularly affected. Demand in northern regions is showing a gradual decline. In summary, polyethylene market prices are expected to remain weak in the short term.

7. Relevant Product Information

Crude Oil Market: The main trading logic of the international crude oil market has not changed. The positive factors come from the continuation of U.S. sanctions policies on oil-producing countries and the uncertainty of geopolitical situations, while the negative factors are OPEC+ maintains its stance on increasing production while the global economy and demand remain weak. The market is increasingly characterized by oversupply, and recently expectations of a Fed rate cut in December have cooled. It is expected that tomorrow international oil prices will show a declining trend.

8. Data Calendar

Table 3   Domestic Polyethylene Data Overview Table (Unit: 10,000 tons)