In November 2023, the PE market fluctuated and declined, with a weak trend. Firstly, demand is weak, and the increase in new orders in downstream industries is limited. Agricultural film production has entered the off-season, and the start-up rate of downstream enterprises has declined. The market mentality is not good, and the enthusiasm for terminal procurement is not good. Downstream customers continue to wait and see for market prices, which affects the current market shipping speed and mentality. Secondly, there is sufficient domestic supply, with a production of 22.4401 million tons from January to October, an increase of 2.0123 million tons from the same period last year, an increase of 9.85%. The total domestic supply is 33.4928 million tons, an increase of 1.9567 million tons from the same period last year, an increase of 6.20%. At the end of the month, there was an increase in market attention towards low prices, and some merchants showed a certain intention to replenish their positions at low levels.
In December, the international commodity market will face pressure from the expectation of a global economic slowdown in 2024. At the end of the year, the market is cautious and will continue to focus on short-term operations such as fast in and fast out. Despite multiple bearish factors such as weak demand and weakened cost support, it is expected that there will still be downward space in the market, and attention will be paid to the temporary rebound point of price levels.
Firstly, demand continues to be weak and market sentiment is poor. Entering December, the demand for export Christmas goods and packaging film for New Year's and Spring Festival will be reflected, with many macro uncertainties. At the end of the year, the overall demand will remain flat, and downstream factories are expected to decline in production. Some factories may enter the holiday ahead of schedule. Secondly, supply continues to increase. At the end of November, the inventory of two types of oil was higher than the same period last year, and port inventory was normally higher. At the end of the year, although the US dollar exchange rate weakened, the demand in the Chinese market was weak, and arbitrage space was relatively limited. The import volume of PE in December will decrease, and there are not many domestic maintenance enterprises. Domestic resources are abundant, and social inventory is expected to digest slowly. Finally, the cost support is insufficient, and the international crude oil market in December will face pressure from the expected global economic slowdown in 2024, thereby suppressing the trend of oil prices, and crude oil prices may show a fluctuating downward trend.
Overall, the poor employment data in the United States has raised concerns among investors about the economic outlook and energy demand outlook, and the international commodity market will face pressure from expectations of a slowdown in global economic growth in 2024 in December. Recently, domestic economic growth has been relatively stable, and the easing of geopolitical risks has provided support for the RMB exchange rate. The rebound in RMB foreign exchange trading volume may have accelerated the recent appreciation of the RMB. The short-term appreciation trend of the RMB may continue, but the weak demand in the Chinese market and relatively limited arbitrage space will not bring much pressure to the domestic PE supply.
In December, the maintenance of equipment by domestic petrochemical enterprises will decrease, and the pressure on domestic supply will increase. The demand in the Chinese market is weak, and the arbitrage space is relatively limited. At the end of the year, it is expected that the import quantity will not change much, so the overall domestic supply level will remain relatively high. The market demand is in the off-season stage, and the accumulation of downstream orders is significantly slowing down, with more emphasis on replenishing essential demand. In December, the international commodity market will face pressure from the expected slowdown in global economic growth in 2024. Based on comprehensive analysis, the polyethylene market remained weak and volatile in December, with the possibility of a slight decline in price center. Considering the strong support of domestic policies and the continuous decline in prices, merchants have a certain stage of replenishment demand, which makes it difficult to form a unilateral downward trend to support the market. After the price decline, there is an expectation of rebound and repair. Under the situation of oversupply, the upward height is limited, and the linear mainstream is 7800-8400 yuan/ton. In summary, there was sufficient domestic supply in December, but there was still a strong demand. As we entered the year-end stage, the market faced pressure to recover funds and overall demand was insufficient. With cautious support in operation, the market trend may be weak. However, after a continuous decline, there may be a manifestation of low level stage replenishment, and a slight rebound may still be expected.
Post time: Dec-11-2023