Long-Short Positions Neck and Neck On-Exchange, LLDPE Continues Range-Bound Fluctuation

Recently, the LLDPE market has continued to fluctuate within a range, with both bullish and bearish factors intertwined, resulting in no significant breakthrough in LLDPE prices. As of August 15, the spot price of LLDPE in North China was 7,200-7,400 yuan/ton, down 50 yuan/ton at the low end compared to 7,250-7,400 yuan/ton at the end of July; in East China, the spot price was 7,250-7,350 yuan/ton, down 100 yuan/ton compared to 7,350-7,450 yuan/ton at the end of July; in South China, the spot price was 7,400-7,570 yuan/ton, with the high end down 30 yuan/ton compared to 7,400-7,600 yuan/ton at the end of July.

Inventory pressure is low, coupled with a decline in operating rates.

As of August 15, the combined inventory of the two oils is 765,000 tons, a decrease of 10,000 tons compared to yesterday, and 40,000 tons lower than the 805,000 tons recorded on August 15, 2024 (same date). The current inventory level is at a medium level for the year, with no significant stockpiling pressure.

Data source: JLC

In August, the end of the maintenance cycle and the recovery of demand in certain sectors drove growth.PE The capacity utilization rate of manufacturing enterprises has shown a steady upward trend. However, since mid-August, factory shutdowns for maintenance have increased. Among them, Wanhua Chemical’s 450,000-ton full-density and 350,000-ton low-density units have entered maintenance cycles and are scheduled to restart in early October; Fushun Petrochemical’s new 350,000-ton low-density unit will be under maintenance until October. The contraction on the supply side led to a 3.09 percentage point month-on-month decrease in the polyethylene operating rate to 76.45% as of August 15, and the proportion of linear production fell to 34.22%, down 3.45 percentage points from the annual average of 37.67%. Short-term supply pressure is expected to ease.

Insufficient demand support, with downstream operating rates lingering at low levels.

Demand remains weak, with the weekly operating rate of PE packaging film at 53.5% and agricultural film at only 23%, an increase of 0.5-1% from last week, remaining at a seasonal low. Downstream factories have limited acceptance of high-priced sources, with a cautious procurement pace, mostly maintaining a "buy as needed" strategy. It is difficult to form an effective replenishment trend, and the demand side's boosting effect on prices is insufficient.

Market Outlook: Coexistence of Bottom Support and Upward Resistance

In the short term, the PE market is in a game of "supply contraction + weak demand": supply reduction caused by plant maintenance, positive signals from macro policies, and factory price support sentiment form the market's bottom support; while slow recovery of downstream demand and relatively high absolute inventory levels restrict the upward price potential. It is expected that the PE market will continue to fluctuate within a range in the short term, with attention focused on the recovery of downstream demand.