There are long-term concerns in the PE market

Since the beginning of this year, the polyethylene (PE) market has basically deduced a "V" trend.
In the first quarter, it was affected by the epidemic, and the price of the "mask fever" rose sharply in April, but it was quickly beaten back to its original shape
.
In the second half of the year, with the gradual resumption of work and production at home and abroad, PE prices have gradually recovered under the boost of increased demand
.
Take linear low-density polyethylene (LLDPE) in East China as an example, which has closed up 6.
5% during the year
.
However, in the author's opinion, the peak of domestic PE capacity expansion is coming, coupled with the increase of low-cost imported products, the market supply will be greatly increased, while downstream demand is relatively stable, there are hidden concerns in the long-term PE market
.
From the perspective of supply, the domestic PE market will usher in a peak period of capacity expansion
.
According to chemical online statistics, as of the end of 2019, the total domestic PE production capacity exceeded 19 million tons per year
.
Entering 2020, a large number of integrated refining and chemical projects have been put into production, and most of these projects are supporting downstream PE devices
.
As of October, a total of 2.
7 million tons/year of PE equipment including Zhejiang Petrochemical 750,000 tons/year and Polaris Basel 800,000 tons/year have been put into operation, and domestic production capacity has jumped to 21.
7 million tons/year
.
In addition, there will be 400,000 tons/year of Heilongjiang Haiguolong Oil and Petrochemical, 800,000 tons/year of Yantai Wanhua and 300,000 tons/year of Yulin Energy and Chemical, and the overall supply of PE will increase significantly
.
In terms of imports, PE imports have maintained a growth trend this year
.
According to customs data, the total import volume of PE from January to September was 13,735,900 tons, an increase of 11.
3% over the same period last year
.
It is worth noting that the PE production capacity in the United States has grown rapidly in recent years.
In 2019, the newly added PE production capacity in the United States exceeded 2.
5 million tons/year.
This year, the Iquista 550,000 tons/year plant has been put into operation, and Sasol 420,000 tons/year The device is planned to be put into production in the near future
.
U.
S.
PE equipment mainly uses ethane as the raw material, and the cost advantage is obvious.
In view of the relatively stable local PE demand, it is expected that the U.
S.
exports to China will increase in the later period
.
From the perspective of demand, the downstream demand structure of PE is relatively stable.
High-density polyethylene (HDPE) can be widely used in film, injection molding and other fields.
LDPE and LLDPE are mainly used for packaging film and agricultural film production
.
As a large agricultural country, China has a huge market demand for agricultural films, but the overall growth is relatively stable and it is difficult to greatly improve
.
In terms of packaging, the growth of express delivery business has provided strong support for PE packaging demand
.
However, since the introduction of the new version of the "plastic ban" in January 2020, the provincial "plastic ban" policy has significantly accelerated, and many provinces have successively issued local "plastic ban orders", which restricts PE demand
.
In summary, in recent years, large-scale refining and chemical integration projects have entered the peak of production, and PE production capacity will be greatly increased.
In addition, the import volume of low-cost PE continues to increase, and downstream demand has no bright spots.
In the future, domestic PE general-purpose materials market competition will become more Fierce
.