International crude oil prices broke through and stood firm at the $80 mark at the beginning of this year, and have since continued their upward pace. As of February 15, WTI closed at $95.46 / barrel on the New York Mercantile Exchange. The Brent April crude oil spot contract closed at $96.48 / barrel, a new high since 2014, and within reach of the $100 mark. In terms of ethylene, affected by the tightening of supply and the rising price of crude oil naphtha, prices rose strongly, as of February 15, CFR Northeast Asia closing price of 1197-1205 US dollars/ton, up 22.42% from the pre-holiday. Although the upstream rise eye-catching, but China PE prices and crude oil, ethylene prices diverged, to the plastic city market for example, LLDPE prices fell 2.21% before the holiday, LDPE prices fell 1.22%, HDPE prices fell 0.5%. The significant rise of the upstream market is difficult to form a strong boost to most downstream varieties, on the one hand, under the cost pressure brought by the high crude oil, on the other hand, subject to demand (the chemical industry oversupply phenomenon is more common), the price push up is limited, resulting in squeezed profit margins.

At present, petrochemical inventories continue to accumulate, as of February 15, the two oil inventories of 1.03 million tons, an increase of 98.1% compared with the pre-holiday. In order to reduce the inventory pressure, petrochemical can only reduce the inventory pressure by means of price reduction sales. The port inventory recently increased the amount of overseas goods to the port, coupled with the light market trading atmosphere after the holiday, the port inventory also has a certain accumulation, as of February 11, the total port sample inventory in 292,400 tons, an increase of 19.6% compared with the pre-holiday.

In terms of demand, with the end of the holiday, the downstream operating rate has picked up, but the speed is slow, and some enterprises are concentrated on resuming work around February 10 and 15. At present, the operating rate of the downstream industries of PE is 25.5%, the new orders are limited, and the price of raw materials is volatile, and the enterprises mainly digest the inventory before the holiday, and the purchase intention is flat. It can be said that the increasing inventory and the slow recovery of demand is the main reason for the decline in the price of PE this round.

In the case of prominent contradiction between supply and demand, is there still an opportunity for PE market to improve?

March to June is the month of centralized maintenance of Sinopec equipment, involving equipment including Yangzi Petrochemical, Zhongtian Hechuang, Yanshan Petrochemical, Maoming Petrochemical, Tianjin Petrochemical, etc. The capacity involved in maintenance reached 3.84 million tons, and the loss caused by maintenance is expected to be 187,000 tons. Under this situation, the supply pressure will be eased. And after late February, downstream factories have started to enter the market, the weather is warming, demand is expected to improve, agricultural film industry is also about to usher in the peak season, the price is expected to repair upward.

In addition, ""Opec +"" supply is tight, and international oil inventories are at a low level. At the same time, with global supply lagging, global energy demand is emerging from the shadow of the pandemic and showing a marked rebound. In addition, geopolitical turmoil and multi-institutional bullish views, the probability of high and volatile oil prices in the short term is greater.

""The mountain is poor and the water is doubtful, the willow is bright and the village is bright"", under the support of inventory reduction, demand recovery and high cost, there is reason to believe that the polyethylene market can be predicted to improve.