PE Daily Report: Strong Raw Material Trends Push Market Prices Up

1. Today's Summary

① The conflict between the United States, Israel, and Iran continues, combined with the closure of the Strait of Hormuz, increasing concerns about supply, causing international oil prices to rise. NYMEX crude oil futures contract 04 at 74.56 rose 3.33 dollars per barrel, up 4.67% on a daily basis; ICE Brent crude oil futures contract 05 at 81.40 rose 3.66 dollars per barrel, up 4.71% on a daily basis.

②、 The HD PE market price fluctuated by 196-296 yuan/ton, the LDPE market price increased by 420 yuan/ton, and the LLDPE market price increased by 216 yuan/ton.

2. Overview of Spot Goods

Cost support remains strong, but downstream factories' resistance to high prices has increased, making it difficult to provide further guidance. The market is mainly digesting the increased price levels, and transactions have slowed down slightly. The strong international crude oil prices and the cost support from shipping disruptions in the Middle East, coupled with firm petrochemical ex-factory prices and tight local supply, have kept spot quotations generally firm. HDPE market prices fluctuated by RMB 196–296 per ton, LDPE market prices increased by RMB 420 per ton, and LLDPE market prices rose by RMB 216 per ton.

Figure 1 Domestic Polyethylene Price Trends by Grade (RMB) /ton)

Data Source: Longzhong Information

3 Basis between futures and spot

Figure 2   Polyethylene Basis Spread Trend (CNY) /ton

Data source: LMD Research

The main LL futures contract fluctuated and increased, opening at 7350 yuan/ton. As of 15:00, the closing price was 7355 yuan/ton, up 262 yuan/ton from the previous settlement day's settlement price. The trading volume was 1.382 million lots, and the open interest was 381,700 lots. Today's futures-spot basis was -175 yuan/ton, an increase of 25 yuan/ton from the previous working day.

4 Production Dynamics

Table 2   Domestic Polyethylene Production Scheduling Ratio Table

Currently, the linear thin-film production scheduling ratio is the highest, accounting for the largest share. 32.8%, differing by 1.8% from the annual average; low-pressure pipe materials show a significant difference from the annual average data, currently accounting for 12%, differing by 2.4% from the annual average.

Diagram 3   Domestic Polyethylene Profit vs. Price (RMB) /ton)

Data Source: Longzhong Information

Oil production cost 8450 yuan/ton; coal-based cost is 6670 yuan/ton; oil-based profit is -1350 yuan/ton; coal-based profit is 750 yuan/ton.

5 Market sentiment

Table 3   Domestic PE upstream and downstream industry participants' sentiment expectations

6. Price Forecast

In the short term, the strong international crude oil prices and the cost support from disruptions in Middle East shipping, coupled with firm petrochemical ex-factory prices and tight local supply, have led to generally firm spot quotations; however, the slow pace of downstream resumption and the predominance of small orders for essential needs have limited the acceptance of high prices, and the market is cautious about chasing higher prices. It is expected that the polyethylene market price will maintain an upward trend tomorrow, with the rate of increase slowing down, and the adjustment range will be RMB 100–300 per ton

7. Relevant Product Information

Crude Oil Market In the short term, the primary trading logic in the international crude oil market remains unchanged, with bullish factors stemming from OPEC+ has paused its production increases, U.S. sanctions on oil-producing countries continue, and geopolitical uncertainties persist. On the bearish side are weak global economic conditions, sluggish demand, and the Fed's slow pace of interest rate cuts. The Israel-Iran conflict remains the market's focal point, and concerns over supply risks are mounting, suggesting upside potential for international oil prices today.

8. Data Calendar

Table 4   Domestic Polyethylene Data Overview (Unit: Ten Thousand Tons)