2016 is a commodity bull market, the price of plastic futures prices higher year on year, 1705 contract hit a new high in December 12th, recently in the vicinity of 10000 yuan / ton oscillation finishing. Although the 2016 PE device production capacity has entered the intensive period, but due to the demand for better, the overall trend in the overall price of plastic is not bad, low elevation, high point of continuous breakthroughs. Combined with the current PE market fundamentals, I believe that the latter 1705 contracts in December 12th hit a high point may still be broken.
2017 PE actual production capacity may be less than expected
Capacity is one of the factors affecting the price trend, the production of more than does not mean that the price will fall, sometimes the opposite. 2015 domestic PE new production capacity of the actual zero, but then prices fell. In 2016 the domestic production capacity of PE put into the intensive period, according to the statistics in 2016 the domestic PE production capacity increased by 1 million 170 thousand tons, an increase of 7.77% last year; in 2017 China plans to add 2 million 370 thousand tons of production capacity, the chain will increase by 14.6% over the previous year, converted into effective chain of production capacity is expected to increase by 7.55%, but considering that in recent years the PE device production schedule are mostly less than expected, delayed put more generally, the actual production capacity on 2017 and may be less than expected.
2016 overseas PE devices put more new capacity is also more, but the overseas supply on the domestic market does not cause an impact. Expected in 2016 domestic imports of PE will be reduced by about 9%, which is the first time since 2011 PE imports decreased.
The main reason of reduced imports is the devaluation of the renminbi, raise the cost of imports, imports of losses, the author calculated the year 2016 LLDPE import profit almost at a loss, after October with the devaluation of the RMB to speed up the process of increasing the loss of imports expanded to 1000 - 1500 yuan / ton. We believe that the RMB will continue to depreciate in 2017, which will not be conducive to PE imports but conducive to PE exports, so the overseas market PE new capacity will not significantly impact the domestic market.
PE downstream demand is generally improved
In 2015, although PE was limited in terms of supply, demand fell, so overall prices fell. 2016 domestic macroeconomic has improved, PE downstream demand overall improvement, so although the new capacity in 2016 put more, but due to demand support, price increases. From the downstream end of the PE product output growth, the main products are a rebound trend, in 2016 1 - in November the growth rate of plastic film production increased from 3.4% to 6%, daily plastic products increased from 0.67% to.
The current macroeconomic indicators are generally better, little change in the economic situation. From the downstream consumption of plastic seasonal point of view, from November to the Spring Festival is the film demand reserve period, after the Spring Festival to March is the peak season demand. Therefore, the latter part of the demand for plastic prices have some support.
PE new material to replace recycled material will increase
The first 10 months of 2016, the domestic PE recycled material production decreased by nearly 500 thousand tons, a decrease of nearly 12%. The PE renewable material imports fell more, the first 10 months of this year, imports of PE recycled material cumulative reduction of 926 thousand and 300 tons, down about 45%. PE renewable materials supply significantly reduced, the main reason is that the government environmental protection material market on regeneration of unprecedented efforts to rectify, North China, East China major waste plastics market hit large, a large number of renewable materials processing workshop shut down for several months or even shut down. 2017 national environmental protection efforts will not be relaxed, recycled material will gradually withdraw from the market, the new material will replace the replacement of recycled materials, PE new material demand will be enlarged.
Judging from the current plastic market, although there is a new capacity to increase the supply of unfavorable factors caused by increased supply, but the actual effect of the actual production capacity may be less than expected. In the overall macroeconomic stability in the context of the rise, PE downstream demand improvement, and demand is the most critical variable to determine the price of plastic. 2016 to improve the price of the driving effect is obvious, the author of the first half of 2017, the economy is relatively optimistic, demand driven factors still exist, the 1705 contract is still possible to a new high.