The polyethylene market is mainly subject to weak volatility, and the price center is declining
2023/10/26
China's polyethylene production is expected to reach 28.1423 million tons in 2023. From a monthly perspective, the production in February was the lowest. On the one hand, the working days were limited, and on the other hand, the joint maintenance of CNOOC Shell and Zhong'an lasted for more than 10 days in February. There were many temporary parking of other devices, and the maintenance loss in February increased by 42.67% year-on-year, resulting in the lowest polyethylene production in February for the whole year.
In 2023, a total of 2.6 million tons of new polyethylene production units were put into operation, of which 2.2 million tons were put into operation in the first quarter. Guangdong Petrochemical and Hainan Refining and Chemical had a total production capacity of 1.8 million tons put into operation in February, and production has been increasing since March. Although the second quarter is a traditional maintenance peak season, due to the high drop in crude oil prices, the loss of maintenance in the second quarter decreased by 14.66% year-on-year. Coupled with the production of new devices, the production in the second quarter is still at a high level. With the completion of major maintenance in the fourth quarter, the production reached its highest level throughout the year. It is expected that the total polyethylene production in the fourth quarter will reach 7.4482 million tons, an increase of 7.05% compared to the third quarter. In the first half of 2023, the total production was 13.7366 million tons, with an expected production of 14.4057 million tons in the second half. The production in the second half increased by 4.87% month on month.
The utilization rate of polyethylene production in 2023 is expected to be around 85%, an increase of 2.5 percentage points compared to last year. Due to geopolitical influence in 2022, crude oil prices are at a high level, and production enterprises have to stop or reduce their load to avoid risks. In addition, accidents at Shanghai Petrochemical and Maoming Petrochemical led to plant shutdowns, resulting in a low utilization rate of polyethylene production capacity in 2022, with an average annual level of 82.49%, a decrease of 4.81 percentage points compared to 2021.
In 2023, with the high international crude oil prices falling back, the capacity utilization rate of polyethylene production enterprises has been restored, with a monthly average fluctuation range of 79.75% -87.86%, and the overall trend shows a "V" shape. July is the peak season for maintenance, with major overhauls of units such as Daqing Petrochemical, Lanzhou Petrochemical, and Yan'an Energy Chemical, resulting in the lowest capacity utilization rate for the year, dropping to 79.75%. The new production in 2023 is mainly concentrated in the first quarter. In the initial stage of production, the operating load of the devices was not saturated, and the second quarter gradually entered the maintenance season. The number of maintenance devices gradually increased, so the utilization rate of polyethylene production capacity showed a downward trend in the first half of the year. In the second half of the year, as the operation of new devices tends to stabilize and the number of overlapping maintenance devices decreases, the production utilization rate steadily increases, and is expected to increase to around 87.5% in December.
In the future, the number of domestic maintenance devices for polyethylene has decreased, and the utilization rate of production capacity has increased. Recently, there have been more imported resources arriving at ports, and the supply side is relatively sufficient; The peak season for demand side plastic film is approaching its end, and the support for plastic film is weakening. Other fields, such as the packaging and plastic industry, although they have holiday support, are expected to have limited traction, and the demand for raw material support is weakening; Cost side support still exists. Overall, there is an increase in supply and a decrease in demand, and the supply-demand contradiction may further intensify. The market price center may shift downwards, but cost support is still ongoing. The domestic polyethylene market is mainly weak in volatility, and the price center in the fourth quarter is lower than in the third quarter.
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