[EVA Weekly Review] Staged Supply-Demand Mismatch Causes EVA Prices to Fall Slightly

1. Market Review of the Week: EVA market prices exhibit weak consolidation.

This week, EVA prices are weakly consolidating, with overall transaction activity being sluggish.Reference prices: Foam hard materials are priced at 10,700-11,400 yuan/ton, foam soft materials/cable materials at 10,800-11,600 yuan/ton, hot melt adhesives at 11,000-11,800 yuan/ton, and photovoltaic materials at 11,000-11,300 yuan/ton.

2. Driver Analysis: Periodic Supply-Demand Mismatch, Slight Increase in Supply Pressure

Some petrochemical companies are during the October 1st holiday, coupled with some traders on the trade side realizing profits and concentrating on shipments, which has slightly increased market supply pressure. On the demand side, the price transmission in non-photovoltaic downstream sectors is impeded, and under high prices, companies have a low speculative intention, while weak orders restrict the just needs. The photovoltaic demand is still acceptable, and the spot supply remains tight, but recently, with an increase in photovoltaic material output from enterprises, the shortage situation has slightly eased.

3. Market Outlook for Next Week: Focus on the Impact of Production Companies' Sales Strategies on the Market

Supply and Demand:From the supply side, the current EVA plant operating load is 80.09%, down 1.52 percentage points month-on-month. This week, the supply volume is slightly below normal, but considering the National Day holiday, production facilities are operating normally while demand is limited during the holiday, resulting in a temporary mismatch between supply and demand. Some companies pre-sold in advance before the holiday, leading to a short-term increase in market supply pressure during the holiday. However, from the current sales situation of production enterprises, the inventory pressure after the holiday is not significant, which is expected to provide some support for petrochemical ex-factory prices. On the demand side, downstream new orders are insufficient, and high prices of EVA particles limit the transmission capability downstream, constraining demand. Before the holiday, there was a slight imbalance between supply and demand, while after the holiday, a rebalancing process is expected. In the context of a tight supply-demand balance, the mentality of market participants, the behavior of traders, and petrochemical pricing strategies have a significant impact on the market.

Cost and upstream:Next week, the average price of U.S. crude oil is expected to be $64 per barrel, with a fluctuation range between $62 and $65 per barrel. Frequent attacks by Ukraine on refineries within a certain European country have led to restrictions on petroleum product exports. Meanwhile, former U.S. President Trump has openly called on the European country to stop importing oil from this European country, urging European nations to completely eliminate their energy dependence on it. This presents a short-term risk of shifts in global trade flows, though the risk of actual supply disruptions remains low. Regarding the Middle East situation, the U.S. has demanded Israel refrain from annexing the West Bank and urged for peace talks with Saudi Arabia, Qatar, and others, thereby reducing the risk of escalation. Consequently, geopolitical disturbances are expected to support oil prices, although cooling expectations exist, suggesting that oil prices may see a fluctuating trend. From a risk perspective, the escalation of the Russia-Ukraine situation and the abatement of Middle Eastern geopolitical tensions are noteworthy.

After the National Day holiday, the EVA market price is expected to weakly consolidate. The market supply and demand are tightly balanced, while industry sentiment is bearish. If some traders engage in pre-sales, it may increase market supply after the holiday. Downstream demand hasn't shown significant improvement, and downstream sentiment remains bearish, with low speculative interest. Preliminary forecasts suggest that post-holiday EVA market prices may remain stagnant. Attention should be paid to petrochemical sales strategies and trader actions for further market guidance. Preliminary forecasts suggest that the price for foaming hard materials may be around 10,700-11,600 yuan/ton.