The polyolefin market is expected to steadily rise in the second half of the year

In recent years, with the rapid economic development, China's consumption of polyethylene (PE) has increased year by year, and in the country has formed from the upstream oil refining and refining companies, to intermediate traders, to downstream packaging, pipe production, etc. The processing industry's huge industrial chain. It is because of the characteristics of the polyethylene industry that it has a long industrial chain and wide coverage. In 2011, the Polyolefins Special Symposium of the Plastics Industry Conference attracted many domestic industry companies to actively participate.

Participating professionals generally believed that although the effects of the current domestic macroeconomic control policies began to appear, the polyolefin industry was facing problems such as poor downstream consumption. However, in the second half of the year, with the acceleration of the progress of domestic housing construction, the urbanization process continued to deepen. The price of olefins PE and PP is expected to rise steadily.

“If the price of crude oil can be stabilized at the current level in the second half of the year, the prices of the three major domestic PE products will basically remain stable, and will show a steady increase.” Li Zhenfeng, deputy general manager of Sinopec Chemicals Sales Huadong Branch, was on the forum. He said that although the current political situation in the Middle East is still unclear, the price of oil as a raw material for PE upstream is unlikely to rise sharply and fall, and it will oscillate around the current 100 US dollars, which will provide stable support for PE prices.

Ma Wensheng, chairman of Xinhu Futures, said that in the second half of the year, PE prices will also show a steady rise. He believes that after experiencing the tightening of domestic macroeconomic policies at the end of the past and the overall adjustment of the commodity market, the current PE price has entered a relatively low range. At the same time, survey reports on some industry companies show that with the fall in prices, many industries appear to be returning orders, and downstream demand has started to pick up, and inventory has declined. In this overall environment, PE prices are expected to rise steadily in the second half of the year. Yu Xiang, general manager of Xiamen Xiangyu Co., Ltd. Plasticization Division II also stated that although domestic PE prices are under great pressure, with the arrival of the agricultural film season, driven by downstream demand, PE prices will appear certain. The level rebounded, but the margin was limited, and it was not even possible to rule out the possibility of a sharp decline.

It is understood that huge market demand has stimulated the increase of domestic production capacity, but also led to the import of polyethylene. In 2009 and 2010, domestic polyethylene imports remained at 7.5 million tons. It is worth noting that the distribution of domestic polyethylene imports also shows new features. The Middle East has become China's most important source of polyethylene imports.

Cai Shuping, Platts Energy Market Information Asia's deputy editor-in-chief, said that thanks to the cost advantages of natural gas feedstocks, polyolefin products in the Middle East have a strong competitive advantage. Yang Ting, deputy director of China National Chemical and Economic Development Center, also stated at the conference that Saudi Arabia has for the first time replaced South Korea as China’s largest source of polyethylene imports in 2010, and Iran’s growth in China’s polyethylene exports is also significant. In terms of polypropylene imports, Saudi Arabia has already leapt to China's second largest source of imports. In 2010, imports reached 686,000 tons, an increase of 55.6% year-on-year. At the same time, in order to cope with the high international oil prices, the production capacity of domestic coal-to-olefin plants has increased significantly.

According to reports, when the oil price is above US$60, the finished products of coal-based polyethylene and polypropylene will enter the profit margin. Will these impact the supply of domestically-based Sinopec and PetroChina-based suppliers? Li Zhenfeng said that at present, the olefinic products from the Middle East region in the domestic market are growing rapidly. Because of their cost advantages, the market price is also very competitive. However, Middle East products are mainly general-purpose olefins. Sinopec and other products can flexibly arrange product models according to customer needs and avoid price wars with Middle Eastern products. At the same time, the technology of coal-to-olefins also has problems such as immature technology, as well as restrictions on national energy conservation and environmental protection, and has little impact on the existing market structure.

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