Post holiday polyethylene market: exploring solutions amidst imbalances

The end of the Spring Festival holiday has brought new challenges to the polyethylene market. The imbalance between supply and demand has made the development of this industry full of obstacles after the holiday.

Firstly, from the supply side, the pressure is significant. In January, the domestic production of polyethylene increased significantly, and the utilization rate of production capacity improved. The post holiday maintenance plan has been reduced, and some new devices may still undergo trial runs to increase production. The supply will further increase. A large amount of new production capacity will be added in 2024-2025, and with the increase in equipment load and the resumption of shutdown equipment, the trend of supply growth is difficult to stop.

Secondly, the demand side is in a slump. After entering January, the downstream operating rate remained low, and even stagnated during the Spring Festival period. After the holiday, market trading is unlikely to improve and demand is unlikely to show significant improvement. Global economic growth is slowing down, plastic product exports are sluggish, and industry demand growth is limited.

In terms of inventory, transactions have stagnated during the Spring Festival holiday, and both social sample warehouses and import warehouses have seen an increase in inventory. It is expected that inventory will continue to accumulate during the Spring Festival period, making it difficult to digest inventory after the holiday.

Thirdly, the market mentality tends to be pessimistic, with most companies bearish on the future market. International crude oil prices have fallen, cost support has weakened, and the rise in polyethylene prices is limited, which may lead to weak consolidation.

Faced with this supply-demand imbalance, the polyethylene industry urgently needs to find new breakthrough points. Enterprises need to optimize production, adjust production capacity reasonably according to market demand, and avoid excessive supply. We also need to increase technological innovation, develop high value-added products, and enhance market competitiveness.

Although the post holiday polyethylene market presents numerous challenges, it also contains opportunities. All parties in the industry need to work together and actively respond in order to find new directions for development in difficult situations.