[pe daily review] market sentiment weakens, allowing inventory reduction

1. Today's Summary

U.S. commercial crude oil inventories have increased for three consecutive weeks, combined with the prospect of renewed peace talks between Russia and Ukraine, leading to a decrease in international oil prices. The NYMEX crude oil futures for the November contract fell by $0.81 per barrel to $57.46, a decrease of 1.39% compared to the previous period; the ICE Brent oil futures for the December contract fell by $0.85 per barrel to $61.06, a decrease of 1.37% compared to the previous period.

②、 The HD PE market price change range is -3 to 1 yuan/ton, LDPE market price is -17 yuan/ton, LLDPE market price is -3 yuan/ton.

2. Spot Overview

Today, the domestic polyethylene spot market prices remained stable. The macroeconomic environment is quite uncertain, and international crude oil continues to decline, weakening support. Although there are some low-price transactions, downstream restocking efforts have diminished. The market is moving with the trend, with a primary focus on price concessions, and overall market transactions are moderate. The HDPE market price fluctuation is -3 to 1 yuan/ton, LDPE market price is -17 yuan/ton, and LLDPE market price is -3 yuan/ton.

3 Basis between Futures and Spot Prices

The main LL contract fluctuated downward, opening at 6,936 yuan/ton. As of 15:00, the closing price was 6,874 yuan/ton, a decrease of 33 yuan/ton compared to the previous settlement price. The trading volume was 210,400 lots, and the open interest was 565,400 lots. Today's futures-spot basis was 6 yuan/ton, an increase of 55 yuan/ton compared to the previous working day.

4 Production Update

Capacity utilization rate by 82.45% changed to 82%. The oil-based production cost is 7,052 yuan/ton; the oil-based profit is -2 yuan/ton; the coal-based profit is 280 yuan/ton.

Graph 3   Domestic Polyethylene Capacity Utilization Trend	Picture 4   Domestic Polyethylene Profits and Price Comparison (Yuan (per 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 Forecast

According to the current market demand feedback, there is an expectation of increased operations downstream overall, with supportive demand-side benefits and enhanced rigid demand. On the supply side, there is significant short-term supply pressure. With the recovery of supply and the decrease in costs, price expectations are under downward pressure. However, considering that current market prices are near the bottom, the polyethylene market is expected to fluctuate next week, with the extent of the fluctuation being comprehensively assessed. 20-80 yuan/ton.

7. Related Product Information

Crude Oil Market: In the short term, 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 uncertainties of geopolitical situations, while the negative factors are OPEC+ maintains its position on increasing production amid a sluggish global economy. Leaders from the US and Russia will meet again, and new peace talks between Russia and Ukraine are expected to commence, potentially easing geopolitical tensions further. It is anticipated that international oil prices will trend downward next week.

8. Data Calendar

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