At present, the plastic futures price insists on a downward trend, but it is not too disappointing. After the Spring Festival, the price of plastics fell rapidly, but the downstream of low-cost raw materials to withstand the voluntary weakening, superimposed new production capacity expectations, plastics in mid-March opened a downward trend. As of June 15, the main contract of plastics once fell below 7,500 yuan/ton.

The pressure on the supply side is high

With the gradual restart of maintenance and installation, PE maintenance began to weaken rapidly in mid-May. According to the relevant data, as of June 16, PE maintenance capacity accounted for 7.53%, which is in the medium level in recent years, and fell 8.06 percentage points from the late high. Before the end of June, Shanghai Petrochemical, Lianyungang Petrochemical, extended coal and other PE installation programs resumed consumption, and in mid-to-late June, only Maoming Petrochemical added a set of full-density installation with an annual capacity of 220,000 tons to stop maintenance, and it is estimated that the early PE maintenance will continue to be weakened. On the other hand, the concentrated release of new production capacity is expected to bring more and more clear pressure on the market. As of the end of May, Longyou Petrochemical, Huatai Shengfu and Lianyungang Petrochemical PE new installation has been normal output, calculated annual capacity of 1.2 million tons. From June to August, including Shandong Shouguang Luqing Petrochemical, Tianjin Bohua, China-Korea Petrochemical, Zhejiang Petrochemical Phase II, petrochina Changqing Ethylene project and other installation programs were put into operation, with an estimated annual capacity of 3.4 million tons. Although the new installation practice can be delayed, but such a small amount of capacity is expected to bring greater pressure on the September contract.

Demand side is weak for the time being

Since previous years, the plastic demand side has no clear bright spots, especially in the process of the foreign market decline, the downstream replenishment mentality is more cautious, mostly based on just need, strengthening the concept of bearish plastics in the market. From the downstream start point of view, the operating rate of the agricultural film industry has declined to the seasonal bottom range, and the start of other industries is mostly in the same period in recent years. From the seasonal point of view, the start of agricultural film in June will enter the bottoming out stage, the pipe industry operating rate will enter the slow decline stage, it is estimated that the demand for plastic practice will increase unlimited in June. However, considering the just need to promote plastic downstream companies in previous years, raw material inventories are low, and the profits of downstream companies have been repaired after the price of raw materials has fallen, and the downstream has increased replenishment efforts under the condition that the plastic valuation has been low. Before the Dragon Boat Festival, the downstream storage speed has clearly slowed down, which confirms that the downstream replenishment enthusiasm has been improved to a certain level. As of June 11, PE petrochemical inventory 211,000 tons, an increase of 83,000 tons from the previous week, a decline of 28.2%, in comparison, the May Day holiday is longer, but the week before the holiday petrochemical inventory only increased 62,200 tons, which illustrates that the recent downstream restocking efforts have been strengthened. In addition, in the second half of the year, there are more promotional activities on international e-commerce platforms, and in the face of the traditional "gold nine silver ten" off-season, the demand for commonly used plastics can lose a certain boost.

There is support on the cost side

Coal and crude oil prices have risen sharply in the past year. As of June 16, Brent oil prices had broken $74 per barrel. Considering that the global vaccine is still in the process of rapid vaccination, the growth of crude oil demand is expected to be pessimistic, the arrival of the summer driving off-season in the United States is also conducive to adding crude oil demand, and the detailed time of crude oil return to the market is still uncertain, it is estimated that the price of crude oil still has downward space. In terms of coal prices, although international coal prices have shown a wave of rapid decline in the market, coal supply is still tight, and the peak of winter electricity consumption is coming, and coal prices are more hard to support. Raw material prices are running strongly, while plastic prices continue to fall, and the actual consumption profits of each process have been tightened from time to time, and are now at a lower level in the same period in recent years. Profits from coal are comparable to last year when plastic prices were lower. Low valuation may limit the short-term decline of plastics.

Overall, supply growth expectations are still an important factor in the price of pressed plastics, while demand is weak and raw material prices are strong. Supply growth and cost support continued game, plastic short-term oscillation.