Healthy polyethylene margins in China – is it sustainable?

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The collapse of crude oil prices has softened the blow dealt by coronavirus to petrochemical producers in China. Naphtha prices have fallen 70% since January 2020, and polyethylene has only fallen by 17% since January 2020. As such, the polyethylene-naphtha spread has gone from $300/ton at the start of the year to nearly $600/ton. Against the background of global oversupply and coronavirus reducing the demand, how sustainable are polyethylene integrated margins?

Table of contents

  • Slow recovery in demand as global recession fears loom
  • Domestic production will be delayed but won’t decline year-on-year
  • Large import volumes will swell port inventory in the short term
  • Manufacturers’ stockpiles likely to rise again as production outpaces demand
  • Conclusion

Tables and charts

This report includes 5 images and tables including:

  • China polyethylene production forecast
  • Polyethylene port inventory
  • Polyethylene manufacturers’ inventory
  • Polyethylene-naphtha spread forecast
  • Global HDPE plant gate cash cost curve, Brent $34/bbl

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    Healthy polyethylene margins in China – is it sustainable?

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