The low-density polyethylene market in 2005 has three major characteristics:
First, the price increase gradually becomes smaller. Although the volume of low-density polyethylene (using the East China market Q200 as an example) increased in volume from January to April in 2005, the price rose sharply, setting a high of 13,800 yuan (t price, the same below) in intraday trading, but after May, The price dropped sharply. In June, the market price hit a low of the first half of 10,400 yuan. From July to November, the market price trend is still relatively weak. The average price from January to November was 11,616 yuan, up by 486 yuan from the same period of last year, or an increase of 4.36%; in 2004, it was up by 43.95% from 2003. The increase in the market price of low-density polyethylene has gradually become smaller.
Second, the uneven distribution of profits in the product chain, profits are still highly concentrated in the leading crude oil. From January to November, the average price of ethylene in Southeast Asia was US$933, which was a year-on-year increase of US$3, which was significantly lower than that of propylene. The average price of low-density polyethylene was 1,146 U.S. dollars, up 6.9% year-on-year. Analyzing from the product chain, profits are still highly concentrated on leading crude oil.
Third, polyethylene production and sales are booming. In 2005, domestic polyethylene production from January to October was 4.336 million tons, a year-on-year increase of 15.9%. It is estimated that the annual polyethylene production will be 5.15 million tons. From January to October, the import volume was 4.577 million tons, a year-on-year increase of 13.5%. The annual import volume is estimated to be 5.5 million tons, and the apparent consumption for the whole year is about 10.65 million tons.
In 2006, the low-density polyethylene market had favorable negative factors. The main advantages are:
First, the domestic and foreign economy continues to grow. In 2006, due to continued economic growth at home and abroad, the domestic demand for synthetic resins continued to grow rapidly. It is estimated that domestic synthetic resin consumption will reach 34 million tons in 2006, an increase of 7% from 2005. Among them, the demand for polyethylene exceeds 11.3 million tons, and the demand for low-density polyethylene exceeds 3 million tons. There is still a certain gap in the market. With the strong demand for domestic packaging materials and daily-use plastic products and the substantial increase in the demand for construction plastic products, the price of low-density polyethylene will form a certain support.
Second, the demand for low density polyethylene will increase, and the contradiction between supply and demand will slow down. Low-density polyethylene analysis from the future development trend, the biggest use for the general film material, agricultural film. With the level of domestic urbanization and the increase in income of urban residents, it is expected that the output of packaging film will stabilize at around 3 million tons in 2006. The agricultural film material is 1.4 million tons, but considering the production of 400,000 tons/year low density polyethylene plant in Yang-ba, the supply and demand gap of low density polyethylene is expected to be slightly smaller in 2006.
Third, the tariffs for low-density polyethylene are not adjusted downwards. In 2006, the tariff rate of low-density polyethylene was lowered from 10.3% in 2005 to 9.1%. The tax rate was not adjusted so much. It can only be regarded as a fine-tuning and has little impact on the overall profitability of the domestic low-density polyethylene industry. .
At the same time, the unfavorable factors in the low-density polyethylene market are:
The first is the cost pressure of energy and raw materials on low density polyethylene. Domestic consumer prices have risen sharply, especially in the recent period of high energy and raw material prices. In the absence of domestic ethylene supply and the price is still at a high level, there is pressure on low-density polyethylene producers, leading to low-density polyethylene producers. Lower profit levels.
Second, in recent years, there has been an excessive concentration of energy in China. In recent years, the rapid expansion of domestic polyethylene production capacity will lead to increased competition in the polyethylene market in 2006, to a certain extent, to suppress the rise in the price of low-density polyethylene.
The third is the influence of the country’s macro-control. The State Council pointed out at the executive meeting on September 28, 2005 that controlling the size of fixed assets, especially under the strict control of real estate, the demand of the polyethylene market will be affected. In 2006, the price of low-density polyethylene will have Slightly lower. At the same time, the appreciation of the renminbi will affect the export of domestic low-density polyethylene downstream products, causing some of the exported products to turn to the domestic market, resulting in excess supply of some products, further increasing the sales pressure in the domestic market.
According to relevant data analysis, under the influence of the high cost of low-density polyethylene products, the profitability of the downstream processing industry of low-density polyethylene has gradually declined. In addition, uncertain factors still exist. The impact of US crude oil policy, international politics, and natural disasters on international crude oil prices will affect the prices of ethylene and low-density polyethylene industrial chain prices.
Although the world petrochemical industry was at the end of the economic cycle in 2006, the increase in demand in the international crude oil market will lead to a firmer price trend for international ethylene and low density polyethylene. Due to changes in the product distribution model, the production profits of LLDPE manufacturers will decline. Due to the centralized sales of Sinopec and the enhanced centralized control capabilities, it is expected that the range of price fluctuations in 2006 will become smaller. In the case of the survival of the fittest in the market, some middlemen will be eliminated from the market. In short, the unfavorable factors in the low-density polyethylene market in 2006 are still many, especially the domestic capacity of low-density polyethylene concentrate in recent years, will inhibit the sharp rise in the price of low-density polyethylene. However, due to the rapid economic development in Jiangsu, Zhejiang, Shanghai and Guangdong, the demand for low density polyethylene will continue to increase, and the market will remain active.
In 2005, the domestic low-density polyethylene market was stable under the stimulation of increased demand and sharply higher international crude oil and ethylene prices, showing a booming production and sales situation. In 2006, it will be a favorable situation for negative coexistence. Although the pattern of both production and sales is difficult to change, the range of market price fluctuations will be smaller.