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[Guide] : In the first half of the year, due to the impact of public health events, the demand for polyethylene tubing is weak. Although the national macro policy continues to release good news, it has little impact on the tubing.  Take the North China 100S as an example, the lowest price in the market is 8250 yuan/ton.

In the first half of the year, the price of pipes and polyethylene had a similar trend. In the first quarter, the price fluctuated significantly, showing the trend of “M”.

The price trend of pipes and polyethylene in the first quarter is similar, showing the trend of “M”.  From January to early February, the crude oil price was strong, the cost support was strong, and the downstream enterprises were stocking up before the budget, and the price followed the rise.  Returned from February lunar New Year boosted by crude oil increases, prices pull up quickly, but after the Olympics, environmental factors, such as domestic PE pipe factory starts slow start, the whole workshop work load is not high, coupled with the futures dropped sharply after high, confidence in the market, factory after topping up enthusiasm is not high, the mid price highs.  From late February to early March, due to geopolitical influence, crude oil price surged again. Tubular goods fluctuated significantly with crude oil price, and the market price rose with it.  Zhongsha 049 pipe products reached the highest point of 9500 yuan/ton.  After the middle of the year, the price of crude oil dropped from its high level. In addition, public health events recurred in many parts of the country, traffic and transportation were blocked, products were difficult to transport, and end-demand procurement was limited.

In the second quarter, the pipe price fluctuated and dropped. Although the crude oil price fluctuated at a high level, it had a limited impact on polyethylene, and the market gradually shifted from the cost side to the supply and demand side.  Due to the delayed start of the tubular goods peak season, the industry is relatively expecting the demand for tubular goods, and upstream enterprises began to switch to the production of tubular goods. The estimated output of tubular goods in May reached 367,000 tons, a record high, but the terminal demand did not improve significantly, and the price of tubular goods fluctuated.

Can the second half of the pipe price improve?

Supply side: There will still be 2.9 million tons of units put into production in the second half of the year. The units are still dominated by low pressure and full density, and the low-pressure process is still dominated by Elisabel. Pipes are still the ace product, so the pressure of low-pressure products is still large in the second half of the year.

Demand side: This year’s overall demand is weak, the first half of the downstream of many varieties basically no peak season to speak of, the construction has been maintained low.  The second half of the year immediately enters the third quarter demand season, pipe demand will gradually improve, the macro country will continue to release favorable policies, under the support of demand season, pipe price has a certain support, but the focus still needs to pay attention to the implementation of the policy.

Cost: In the second half of 2022, there is a high probability that the Russia-Ukraine conflict will turn around or even come to an end, and the geopolitical support may weaken.  Inflation is rising in the US, the Federal Reserve has been forced to raise interest rates several times, recession fears linger and the global economic environment is weaker.  Therefore, from the perspective of the second half of 2022, the overall price center of the crude oil market may move down, the cost support for polyethylene is weakened, and the cost pressure may be relieved in the second half of the year.

Overall, with the installation put into production in the second half of the year, the pressure on the pipe supply side is still there;  In terms of demand, the demand is still expected in the short term under the favorable macro-policy and the peak season of gold, nine and Silver, and the price support from September to October is strong. In the later period, with the gradual release of output and the end of the peak season of demand, the price of tubular goods will continue to fall.