China Market Reports 17 June 2017

Chine PE Market Forecast

Supply: In the next week, the number of turnarounds will continue to decrease. The 60kt/a old FDPE unit at PetroChina Lanzhou Petrochemical keeps in maintenance. The 470kt/a PE unit at Sinopec Yangzi Petrochemical is maintained. The 650kt/a PE unit at Sinopec Qilu Company keeps in maintenance. The 940kt/a PE unit at PetroChina Fushun Petrochemical will be maintained for a month. The 450kt/a FDPE unit at Sinopec Zhenhai Refining & Chemical will be maintained from Jun 13 to Jun 19. The 60kt/a old LDPE unit at Sinopec Beijing Yanshan Petrochemical will be maintained from Jun 19 to Jun 24. The expected decrease in supply will be 54kt, decreasing from last week. The supply decrease of HDPE takes up most of the total, followed by LLDPE. The import volume is expected to inch up next week, which mainly the HDPE sources from Iran.

Demand: In terms of the agricultural film, the demand has no clear improvement. But the number of high-end shed plastic film increased slightly. Some shed plastic film factories ran at low loads. The agricultural film factories purchased the feedstock PE prudently. Overall, the demand was still soft.

To sum up, the upstream crude oil market kept volatile, giving limited guidance to the PE market. In terms of the spot PE market, the number of turnarounds will be reduced, and the imported HDPE goods will replenish the supply gap. But the supply of HDPE mold blowing and raffia materials is still tight, supporting the prices. The LDPE and LLDPE supply is ample, although part of the grade is a bit tight, but it's hard to have effective impetus on the spot market overall trend. The impact of LLDPE futures prices on spot PE is strengthening. But from the current trends, upward pressure is bigger. The PE prices may move within the range of RMB 8,800-9,500/mt next week.

China SM Market Forecast

This round of rises seen in the styrene market is mainly attributed to the constant declines of styrene stocks at the main ports of East China. About 2 or 3 styrene shipments from Iran will arrive in Jiangsu in late June. A small amount of imported resources from South Korea and Japan will also arrive. On the whole, more imported resources will flow into Jiangsu in the coming days. Players have slowed down their pace of picking up styrene resources from the main warehouses.
Lacking positive support, the styrene market in Jiangsu may decrease from highs in the near term.

Chinese Methanol Inventory at Ports

According to SCI’s incomplete statistics, the arrival volume of imported methanol was about 219.4kt this week. It is estimated that about160.9-170kt of imported methanol will arrive from June 16 to end-June, including 70.9-90kt in Jiangsu, 54-60kt in Zhejiang and 36-51kt in South China.
There will be limited imported cargoes arriving at Taicang area before the end of the month. Some inland resources from central Shaanxi and Henan as well as cargoes from Southwest China and Tianjin will be supplements to the downstream plants in Nanjing and Changzhou.

International Methanol Market Review

This week the mainstream prices of imported methanol rose slightly. Earlier this week, the offers from the suppliers were limited. H1 June loading Iranian cargoes was offered at a premium of 1.5%-2.5%. 5kt of H2 July arrival non-Iranian cargoes from Middle East were traded at a premium of 1.8%, and 5kt of end-June to early July arrival cargoes were dealt at $268-270/mt. Some buyers bid at $260-267/mt. Later this week, the formula-basis bidding offers were a premium of 1.5%-2%, but the suppliers were reluctant to sell at low prices. The dealing prices were $272/mt for July arrival non-Iranian cargoes from Middle East and a premium of 2% for the cargoes from Southeast Asia.

China Methanol Market Forecast

At present, the methanol supply is sufficient in the major consumption areas. Especially this week, large amounts of resources from the major producing areas flow into the market, intensifying the downstream users ‘wait-and-see sentiment. It is predicted that with the supply pressure rising, the methanol producers in the major producing areas may continue to cut offers, and the mainstream dealing prices are also expected to move down due to poor downstream demand. The prices are estimated in the range of RMB1,930-1,980/mt in Inner Mongolia and RMB 2,150-2,200/mt in Shandong next week.
In the coastal areas, the supply-demand fundamentals have no obvious improvement, and the market may keep fluctuating with downward potentials in the near term. It is predicted that the average price may be around RMB 2,350/mt next week.

Jun 21, 2017 08:06
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