The hottest fund drives LLDPE prices up

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Funds have driven LLDPE prices up

market observation

since the National Day holiday, the US dollar exchange rate has fallen continuously, and inflation expectations in domestic and foreign markets have suddenly strengthened. Supported by the abundant liquidity accumulated before, the stock market and commodities have shown an upward trend. LLDPE futures also rose explosively after the holiday, with the main contract standing at 11000 yuan/ton at one stroke. Although the overall performance of domestic and foreign stock markets and commodities has been flat recently, LLDPE futures showed a slight change. It rose against the trend last Friday and broke through the early resistance level of 10700 yuan/ton on Monday. We believe that the medium-term factors supporting the whole market at present mainly lie in strong inflation expectations and abundant liquidity at home and abroad. Although LLDPE has relatively flat fundamentals, it has high volatility and reasonable price. Once funds are involved, the medium and short-term performance is expected, and the main futures contract is expected to challenge 12000 yuan/ton

inflation and liquidity continue to support the market

inflation expectations and commodity prices continue to strengthen each other, which determines that the recent bull market will not end easily. The consistent performance of domestic and foreign inflation expectations and commodity prices has formed a whirlwind around the world. The prices of precious metals, cotton, sugar, copper and other commodities are constantly challenging people's imagination, and the price of precious metals has far exceeded the level before the financial crisis

according to market expectations, CPI in October may be as high as 4.1%-4.2% year-on-year, mainly due to the overall rise in food prices. The prediction error of CPI in October is expected to be within 0.2 percentage points. The annual average CPI is expected to reach 3.2%, higher than the previous market estimates. The previous interest rate hike is obviously not enough to have a substantial impact on the current soaring inflation expectations, which will further promote the popularity of various commodities

influenced by the slow recovery of the US economy, the US plan to launch quantitative easing policy again, the weakening of the US dollar and other factors, the appreciation of the RMB accelerated. In order to stabilize the exchange rate, the central bank must buy foreign exchange and sell local currency, which further increases the liquidity of the banking system. The third quarter financial data released by the central bank showed that at the end of September, China's new foreign exchange accounted for 289.565 billion yuan, an increase of 19.19% over August, a new high for the year. In September this year, the M2 balance was 69.64 trillion yuan, an increase of 18.96% over the same period last year. This problem is not particularly obvious in the static experimental machine, an increase of more than 14.9% over the end of 2009; In the first three quarters of this year, RMB loans increased by 6.30 trillion yuan, still at a high level. These signs show that the situation of China's liquidity process may further deteriorate. This is the main direct factor supporting the prices of various commodities and LLDPE in the near future

crude oil and ethylene prices have remained stable

since 2010, crude oil prices have been operating within the US dollar range. Generally speaking, the trend in the third quarter was disappointing. In the strong seasonal settlement, the crude oil price failed to make any progress, but continued to fall sharply after being blocked below $85. In the fourth quarter, crude oil has lost the demand support of China and the United States. The hurricane season will also pass after October, and the oversupply will also expand compared with the third quarter. The global economy is also experiencing growth uncertainty, which has brought pressure on crude oil prices and is also the reason why crude oil prices have lagged behind in the recent past. It is expected that crude oil prices will show a trend of high in the first quarter and low in the second quarter. Before October, crude oil is still supported by the potential positive factors of hurricanes, and the price may continue the current slow recovery momentum; However, after that, due to the gradual release of supply pressure, the crude oil price will fall seasonally. However, due to the recent downward pressure on the dollar, the overall commodity and stock markets are in the upward momentum driven by funds, which was 2 The decline of green and environmentally friendly oils will be limited. Therefore, the dollar will remain the main fluctuation range of crude oil

domestic ethylene production increased rapidly

the figure shows the trend of domestic ethylene production. (image source: wind)

the ethylene market in Asia continued to remain stable, with CFR Northeast Asia closing at 1029 5 US dollars/ton, CFR Southeast Asia closed at 1019 5 dollars/ton. Both the upstream naphtha and downstream polyethylene markets remained good, slightly supporting the ethylene spot market. Due to the recent continuous rise in raw material prices, ethylene profits have been severely squeezed. According to the data released by relevant departments, the domestic ethylene production began to increase in August and September, from 1million tons in the past to about 1.3 million tons, with a year-on-year increase of up to 50%. This directly led to the ethylene price falling sharply from the high point in the first half of the year to the current price. As the expansion of production capacity is one-way, ethylene prices will continue to be suppressed by production and will be difficult to rise significantly. Strong costs and abundant production mean that ethylene prices will remain at the current level to a large extent in the future, with limited fluctuations

the rebound in demand stimulated the increase in supply

according to the data of relevant departments, the agricultural film production in September increased significantly compared with the previous two months, close to the historical high set in March this year. This is consistent with the recent seasonal demand for agricultural film. Further mining this data, we found that LLDPE imports began in August, and the industrial chain has already made full preparations for the current demand

with the increase of demand, LLDPE import volume began to return to a high level in recent two months

the figure shows the trend of LLDPE import volume. (picture source: wind)

according to the current production capacity at home and abroad, as long as there is demand, the output can be met quickly. That is to say, at present, the supply and demand of LLDPE is in a relatively loose equilibrium state, and the supply can be quickly adjusted according to the demand. This has weakened the driving force of the production link on the price of LLDPE, and increased the influence of the trade and digital timer link on the price. In the current situation, flexible lijianbo believes that traders with better neutrality in the upcoming "classification of combustion performance of building materials and products" may have begun to listen to the wind

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