Disappointing Q3 Conclusion, Recycled PE Struggles to Break Through in Q4

[Introduction]:Currently, the recycled PE market is facing the dual pressures of weakened demand and the weak performance of new materials. The negative sentiment is causing recyclers to feel extremely burdened, leading to an increase in pessimistic outlooks for the fourth quarter. It is difficult for prices to remain stable in the fourth quarter, and they may first stabilize before declining.

I'm sorry, it seems there is no content provided above for me to translate. Could you please provide the text you need translated into English?The price gap between new and old materials continues to narrow, making it difficult for recycled prices to be sustained.

In the third quarter, although it is the peak season for agricultural film production and downstream operations have somewhat increased, there is a lack of favorable macro support. Downstream continues to purchase on a just-needed basis, and overall market demand has not improved as expected. The fundamentals of new material PE remain weak, with prices continuing to decline. In October, during the National Day holiday, the impact was...Crude oil pricesThe decline has an impact, with some traders offering lower prices. After the holiday, inventory accumulates, futures operate in a relatively low range, spot offers continue to loosen, and downstream factories have low purchasing intentions, making it difficult to support prices.

At the beginning of the fourth quarter, new PE materials continued the downward trend from the third quarter, dampening the spirits of recycling industry players returning to the market after the holiday. The price difference between new and recycled materials has fallen below 500 yuan/ton, and the price advantage of recycled pellets is continually declining. Terminal product companies, already cautious with their raw material purchases at the end of the peak demand season, are becoming even more cautious with their procurement of recycled materials as the price advantage diminishes. Consequently, actual transactions are mostly small orders based on immediate needs, providing insufficient price support for recycled pellets.

2. Despite the peak season, terminal purchasing power continues to decline.

From this week's capacity utilization rates of various downstream industries of polyethylene, the overall operating rate has increased by 0.84% compared to last week. The capacity utilization rate for agricultural film has increased by 4.22% compared to last week, the rate for pipe materials has increased by 0.33%, the rate for hollow products has increased by 0.44%, the rate for injection molding has increased by 0.62%, the rate for packaging film has risen by 0.41%, while the rate for drawing has decreased by 0.11%.

Although downstream operations have continued to increase this week, the release of terminal orders is somewhat weaker compared to previous years. Large and medium-sized enterprises have relatively sufficient production orders, while small enterprises have accumulated fewer orders. Downstream demand has marginally improved, but it has not formed a "full industry resonance," resulting in an uneven overall demand recovery with limited driving effects. Moreover, as the traditional demand peak season comes to an end, downstream demand for raw materials will further weaken.

3. The price of raw materials is difficult to maintain, and cost support is weakening.

In the third quarter, affected by the decline in recycled pellet prices, the acceptance of high-priced raw materials was low, and recyclers intended to pressure prices and limit the purchase of raw materials. To stimulate sales, raw material suppliers expanded their negotiation space. After the National Day holiday, the recycled PE raw material market continued to operate weakly. Due to the narrowing price gap between new and old materials, downstream manufacturers showed resistance to high-priced raw materials, resulting in sluggish transactions for high-priced recycled PE pellets and a significant decrease in acceptance of high-priced raw materials, with widespread price pressure in procurement. On the supply side, the efficiency of raw material recovery continued to be low due to rainy weather and rising labor costs for recycling, but holders, pressured by cash flow, showed an increased willingness to sell compared to earlier periods, leading to a decline in most raw material prices and a weakening of cost support for recycled PE.

Although there is a peak season in the fourth quarter, the boost is limited, and the prices of recycled pellets are unlikely to rise. The frequency of shipments remains at a sluggish level, making it difficult for raw materials to rebound. Therefore, the fourth quarter is expected to continue operating at low prices. As the recycling market further declines, there is a possibility that raw material prices may further decrease. It is estimated that the mainstream price of domestic EVA waste film will remain at 3700-3900 yuan/ton, the mainstream price of greenhouse film waste will remain at 2800-3100 yuan/ton, and the mainstream price of Wahaha first-grade crushed material will remain at 4000-4300 yuan/ton.

4. Dominated by bearish factors, prices are unlikely to rise in the fourth quarter.

10 As the month comes to an end, the traditional peak demand season is also set to conclude in a tepid manner. The market is gradually shifting into the off-season, and sluggish sales at downstream terminals will reduce operating loads in the market, leading to a decrease in purchasing sentiment for raw materials. In terms of new material PE, prices are expected to continue their downward trend due to increased supply and constraints from crude oil. The price gap between new and recycled materials remains consistently below a reasonable range, causing a decline in purchasing sentiment for recycled materials at the terminals. As temperatures gradually drop, the difficulty of collection for raw materials increases. With limited supply providing some support, raw material suppliers may have plans to hold back stocks, slightly enhancing cost support. However, the support from the cost side is unlikely to counteract the bearish factors in the market.

In summary, the price of recycled PE in the fourth quarter is difficult to maintain, with a tendency to stabilize first and then decline, and actual transactions will mostly depend on negotiation with suppliers. Longzhong Information expects that in the fourth quarter, the price of recycled PE high-pressure white transparent first-grade granules in Hebei will be around 5700-6000 yuan/ton, Juxian EVA granules will be around 5400-5600 yuan/ton, and Hebei Wahaha white granules will be around 5200-5400 yuan/ton.