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Insight | Time: Sep 4 2018 4:10PM
HDPE injection burdened by rising supply
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The price of HDPE injection molding has been fluctuating widely in the year of 2018. At the end of the first quarter and the beginning of the second quarter, it fell to the bottom, and its price was almost the lower limit of all varieties in the domestic PE market. Subsequently, major domestic petrochemical plants immediately reduced the supply of HDPE injection molding, especially PetroChina groups and coal-chemical plants. Amid a sharp fall in supply, HDPE injection molding ushered in a rising period of more than four months. Until the middle of August, the supply of domestic HDPE injection molding began to increase dramatically, and thus dragged market downward.

The recent price fall in HDPE injection grade is mainly because of increasing supply, which is from two main parts:

1. Steady arrivals of imports.
The most commonly seen imported HDPE injection products are HDPE KT10000 from Down Chemical and HDPE 62N07 from Iran plants. Their price deviation from recent highest point is above 300yuan/mt, and the decline ratio has been the largest among all PE products.

Specification Producer Highest (yuan/mt) Current price (yuan/mt)
KT10000 Down Chemical 10,500 10,150
62N07 Iran 10,700 10,300

2. Intensive increase in domestic supply. In Aug, domestic producers, mainly from PetroChina groups and coal-chemical plants, have scheduled HDPE injection grade intensively.

PetroChina Dushanzi PC and PetroChina Fushun PC have switched their 300kt/year production line to HDPE injection in early and mid-Aug, and the production activities continue in Sep. Coal-chemical producers Ningxia Baofeng has switched to HDPE injection since mid-Jul, and Shenhua Baotou has switched in mid-Aug until it is shut on Sep 3 for annual turnaround. In addition, Sinopec Fujian Refining & Petrochemical (FREP) and Liaoning Huajin Tongda also arranged for HDPE injection output in Aug.

Apart from the existing facilities, the newly started Yan’an Energy & Chemical is planning to produce HDPE injection T60-800 in Sep, after it has achieved successful test run in end of Aug. If the 420kt/year new capacity becomes another steady sources of HDPE injection grade, the section of market will be hit heavily.

Plant Device Capacity (kt/year) Production status
PetroChina Dushanzi PC HDPE/LLDPE 300 produce HDPE 8008 in Aug
PetroChina Fushun PC HDPE 350 produce HDPE 7260 since mid-Aug
Ningxia Baofeng HDPE/LLDPE 300 produce HDPE 8008 since mid-Jul
Shenhua Baotou HDPE/LLDPE 300 produce HDPE 8007 since mid-Aug
Liaoning Huajin Tongda HDPE 300 once produced HDPE T5070 in Aug
FREP HDPE/LLDPE 500 once produced HDPE 8008 in Aug
Yanan Energy&Chemical HDPE 420 planned to produce HDPE T60-800 in Sep

After the recent decline in imported HDPE injection products, the market supply has not yet reduced, and there is a greater possibility that the market will continue to fall. The ex-works price of coal-based HDPE 8008 and 8007 has dropped to around 10,000yuan/mt, and it could be only a matter of time before it falls below 10,000yuan/mt.

But the pressure on HDPE injection can be solved. The swing plants, including PetroChina Dushanzi PC, Ningxia Baofeng, Shenhua Baotou, and FREP could switch production of LLDPE or other grades of HDPE, and other HDPE standalone devices could switch to other grades of HDPE. In the pursuit of higher profit, producers may possibly switch to HDPE blowmolding, pipe and film grades, which have been relatively firm. It is not difficult in terms of technology and production possibility.

In summary, the current weakness of HDPE injection comes from the increase of supply. In the short term, the weak pattern may continue, and the low-end products are expected to fall below the threshold of 10,000yuan/mt. However, when price falls too much, as the end of the first quarter, producers will inevitably cut HDPE injection and swing production to other more profitable products, and thus may bring a turning point to HDPE injection market.
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