Supply of PE spot market in the United States is a little tight

Recently, the U.S. polyethylene (PE) market is undergoing a change. While the domestic market announced the price hike, the export price began to rise.

Due to the poor performance of the PE industry in the United States in the first quarter, the unit load rate decreased, and even some plants were shut down. During the outbreak of novel coronavirus pneumonia, the demand for some major PE applications remained stable, but overall demand was still declining.

Exports increased. In recent weeks, a large number of PE resins in the United States have been exported to the Chinese market. The tariff exemption policy has attracted a large number of Chinese buyers to buy American products. Compared with most parts of the world, China has experienced the new crown epidemic earlier, and its market has been reopened and maintained rapid growth. As Southeast Asian countries began to lift the ban, PE exports to Southeast Asia began to improve. Latin America and Africa are the last regions to be affected by the new coronavirus, where demand is still lagging. In the next few months, several major countries in South America will implement stricter control measures to affect demand.

The price of raw materials for PE production is rising, which drives up the price of PE. Since mid April, the price of ethane has more than doubled to its highest level in a year. Most of ethane in the United States is produced in the form of associated gas from oil and gas wells. Due to the sharp drop in crude oil prices and the decrease in oil and gas drilling activities, oil and gas production has declined. The rise of ethane price also led to the rise of ethylene spot price to a certain extent, which was close to the level before the blockade.

At present, the oversupply pattern of PE in the United States remains unchanged. Although the spot supply of PE in the United States is a little tight now, the overall market is still oversupplied. Long before the outbreak, PE supply has been in a state of excess, which may cause the destruction of domestic and global demand structure in the United States in 2020. In addition, the supply of PE in the United States will further increase in the next few years. If the speed of new capacity listing exceeds the growth rate of demand, the market will continue to be oversuppl