GF Futures: LLDPE has a long way to go
after the festival, with the sharp decline of international crude oil and the continuous deterioration of the credit crisis, Dalian plastics quickly plummeted from the front line of 12000 yuan/ton before the festival to the front line of 8000 yuan/ton, a decrease of 30%. Last week, although the OPEC meeting on production reduction and price protection was held in advance, the rebound of plastics and crude oil was short-lived, and then continued to plummet. As of last Friday, the LLDPE 901 contract fell to the 7000 level. To sum up the decline of LLDPE, we believe that there are three main reasons: 1. The financial crisis triggered a sharp decline in crude oil, resulting in the collapse of LLDPE costs; 2. The financial crisis caused a serious global economic downturn or even recession, resulting in a sharp contraction in LLDPE demand; In the past three years, a large number of domestic and foreign LLDPE production capacity increased. In order to make up for oil refining losses, 4 petrochemical enterprises had high load production in the early stage, resulting in the high inventory of LLDPE to be digested. Based on the above four points, mainly the first three points, and the fact that economic recovery needs time, the global joint market rescue is difficult to achieve results in the short term. At the same time, from a pessimistic point of view, the credit crisis may further spread to the world and the real economy, leading to further deterioration of the global economy. Therefore, in the medium and long term, the long bear road of LLDPE is not overSince the collapse of Lehman Brothers, Western economies in Europe and the United States, including Japan, have urgently adopted and begun to implement some huge rescue plans. At the same time, major central banks and the Federal Reserve have also taken unified and joint interest rate cuts. However, the implementation of various measures has not slowed down the decline of the global economy. After the European economy was dragged down by the US crisis, the credit crisis continued to spread to Latin American and Eastern European economies, and emerging economies led by China fell significantly due to the impact of export contraction. The International Monetary Fund previously predicted that the global economic growth in 2008 was only 3.9%; The group released an expected increase of 4.1% in July. The IMF also lowered its global economic growth forecast for 2009 from 3.9% to 3%, the lowest level since 2002 and at the critical point of global economic recession defined by the IMF. The prospect of economic recession hangs over the world. Major institutions continue to reduce the global demand for crude oil. The prospect is worrying. In addition, the US dollar continues to strengthen, and the international crude oil continues to plummet. Last Friday, although OPEC held a production reduction meeting as scheduled and announced that a 1.5 million barrels per day reduction plan would be implemented from November 1, the original blow molding machine to be reduced this time was one of the categories with the largest commercial deficit in the national plastic machine market, and the oil output was about 1.7% of the global crude oil demand, as the amount of production reduction was within the range of market expectations and the market was worried about the crude oil demand, Moreover, the critical attitude of the western world led by the United States towards this production reduction has also increased the difficulty for OPEC to continue to reduce production in the later stage. As a result, on Friday, the settlement price of nymex1 December light and low sulfur crude oil futures fell by $3.69 to $64.15 a barrel, below the $65/barrel level. In the near future, international crude oil is still in a bear market downward trend. The continuous sharp decline of international crude oil has also led to the continuous decline of ethylene monomer, the raw material of LLDPE. As of October 23, the CFR Northeast Asia price of ethylene was US $640/ton, equivalent to the LLDPE cost of 6100 yuan/ton. Considering the lag of ethylene monomer transaction price compared with crude oil, the LLDPE cost is expected to continue to fall this week and fall below 6000 yuan/ton
the global economic downturn inhibits LLDPE demand.
the economic downturn is an indisputable fact. From a macro point of view, economy 2. The decline in the use and development trend of spring tension and compression testing machines with small and medium loads will certainly restrain the demand for LLDPE. Domestically, the sharp decrease in foreign demand in 2008, coupled with the implementation of the domestic monetary tightening policy in the early stage, led to a large number of small and medium-sized plastic processing enterprises facing the same problems as textile enterprises, lack of funds, declining profits and unable to support their operations. Recently, a large toy factory in Dongguan closed down again, which also reflects the plight of small and medium-sized processing enterprises. The current situation is that the operating rate of a large number of domestic small and medium-sized plastic processing enterprises has seriously declined, and the wait-and-see atmosphere in the downstream market is strong, which directly leads to the decline of domestic LLDPE demand. The demand for agricultural film in autumn is also in a weak season due to the sharp decline of agricultural products (12.90, -0.38, -2.86%, bar) and the overall demand decline of LLDPE. At the same time, the inventory of petrochemical enterprises has yet to be digested. Since 2008, domestic petrochemical enterprises have been producing LLDPE at full capacity in order to make up for the oil refining losses in the early stage. Now, they are facing the market decline and their own high inventory, and their shipment mentality is serious. At the same time, although the inventory of plastic traders is low, they do not dare to buy declining products
the production capacity is expected to increase significantly, and the petrochemical business cycle ends.
the market generally believes that the global plastic industry business cycle will end in 2008, because a large number of new petrochemical production capacity will be released in. The end of the business cycle means that the profits of petrochemical enterprises will decline. In serious cases, the profits of PTA enterprises caused by the release of domestic PTA capacity in 2007 are almost zero
at present, China's LLDPE capacity is 2.155 million tons. With full density polyethylene, the total capacity is 3.255 million tons. The annual domestic new capacity is 1.4 million tons of full density capacity, equivalent to 43% of the new capacity. Moreover, in the newly increased production capacity, the friction coefficient of film materials at normal temperature is not only measured before printing, but also under construction. In addition, the industrial strategy of Sinopec is less likely to be cancelled
in terms of the global market, the new ethylene production capacity in 2009 was mainly concentrated in the eastern region. Currently available data show that from the end of 2008 to the first half of 2009, the production capacity released outside China is expected to reach 5million tons, and this part of production capacity is mainly made of natural gas, which is cheap and costs about half of China's, much lower than the domestic traditional naphtha cracking ethylene method. Due to the geographical relationship, this part of production capacity is expected to be mainly sold to China and other Asian regions after release, which will certainly impact the domestic LLDPE market
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