2016 is the commodity bull market, plastics futures prices throughout the year higher oscillation, 1705 contracts in December 12th hit a new high in recent 10000 yuan / ton near finishing oscillation. Although the 2016 production capacity of PE has entered the intensive period, but due to demand better, the overall trend of the price of plastic is not bad, constantly low elevation, high breakthrough.

With the current PE market fundamentals, the author thinks that the late 1705 contracts in December 12th hit a high point may still be a breakthrough.

In 2017 PE the actual launch capacity may be less than expected

Launch capacity is one of the factors that influence the trend of price, capacity delivery does not mean the price will fall, sometimes on the contrary. 2015 domestic PE new zero on the actual capacity, but the current 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.

The new PE device on the overseas production capacity in 2016 will be more, but the overseas supply on the domestic market does not impact. Expected in 2016 domestic imports of PE will be reduced by about 9%, which is since 2011 PE imports fell for the first time.

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 in 2017 the RMB will continue to depreciate, it will not help but is conducive to the export of imported PE PE, so the overseas market PE new capacity will not significantly impact on the domestic market.

PE overall improvement in downstream demand