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China Market Reports 8 August 2017

Chine PE Market Forecast
Supply: The maintenance of China’s PE units are mainly small-scaled in August. The 60kt/a FDPE unit at PetroChina Lanzhou Petrochemical keeps in maintenance. The 300kt/a LLDPE unit at Zhongtian Hechuang Energy was shutdown. The 270kt/a LDPE unit at Shenhua Xinjiang Energy keeps in maintenance. The 60kt/a HDPE 2# Line at Sinopec Beijing Yanshan Company will be shut for 2 days. The 300kt/a HDPE unit at Sinopec-SK (Wuhan) Petrochemical may be shut for 2 days amid change of production line. The 150kt/a HDPE unit at Shanghai Jinfei Petrochemical keeps in maintenance. The expected decreases in supply will be 17kt next week. The import volume in the next week is expected to rise slightly backed by the high domestic PE prices.

Demand: in terms of the agricultural film, the demand continued to rise. The operating rates at film factories were limited by the environmental protection inspections. The factories purchased based on needs amid the cautious attitude, giving limited support to the market.

To sum up, the upstream crude oil market grew slowly, providing limited guidance to the spot PE market. In terms of the spot PE supply, the market supply will gradually increase. Besides, the inventory level at petrochemical is rising and the import volume is expected to inch up. In terms of the demand side, the demand in North China was influenced by the serious environmental protection inspections, and that in East China and South China kept thin. Overall, the market is inactive. In the futures aspect, multiple indicators shows that the LLDPE futures may move down in short run. The Chinese PE market could be forecasted to keep volatile next week. The Chinese mainstream LLDPE prices will be RMB 9,300-9,800/mt.

China SM Market Forecast

The downstream demand is not likely to improve because of the strict environmental protection inspection. With more imports arriving, the stock at the main ports of East China stops declining, instead, it will probably keep growing. Players adopt bearish stances for lack of positive support. The styrene market is likely to remain weak with downward risks.

China Methanol Market Forecast

In the major producing areas, some previously-stopped methanol units will restart next week. With the production resuming, local methanol supply will increase. It is predicted that local producers will continue to focus on the sales, but the methanol prices may be largely stable on low inventories. More resources may flow into other inland areas, while the overall downstream purchasing positivity is still influenced by the environmental protection inspection. Thus, the negotiation prices will keep fluctuating within a narrow range. The prices are estimated in the range of RMB 2,170-2,240/mt in Shandong and RMB 1,970-1,990/mt in Inner Mongolia.
In the coastal areas, unexpected favorable news and rising futures prices pushed up the local spot prices. However, it still needs time for the demand to recover substantially. Therefore, the methanol market in the coastal areas may move sideways next week, and the prices may be in the range of RMB 2,400-2,450/mt.

Aug 8, 2017 15:55
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