Constrained by abundant supply and weak downstream consumption, the price of plastic futures has been showing a weak pattern in the three quarter, and the whole market has oscillated in the range of 8000-9000 yuan / ton. As crude oil prices and plastic spot prices continue to be low, the impact of coal olefin and recycled materials on plastic prices has begun to decline.
Crude oil is low and coal olefins are limited
After 2000, countries have taken countermeasures as the price of international crude oil continues to rise. The United States increases the supply of crude oil by exploiting shale oil, and China is partly replacing crude oil through a coal chemical process. The way between China and the United States to avoid high price crude oil has a strong effect on the LLDPE. As the production of shale oil rises, the supply and demand of international crude oil is out of balance, and the price has plunged. OPEC’s recent production reduction plan has also been politely rejected by Russia, and the problem of the imbalance between supply and demand for crude oil will continue. With the production of coal chemical industry, the increase in the supply of coal to olefin will completely change the supply and demand pattern of plastics. If the impact of coal to olefins on the price of plastics is more than expected at present, then the coal to olefins have begun to impact the main source of plastics in East China.
However, the price advantage of coal to olefins for oil chemical industry has been decreasing as the price of oil has declined. In fact, when the price of crude oil is less than 50 US dollars / barrel, the advantage of coal chemical industry has vanished. So in the short term, although the collapse of crude oil caused the collapse of plastic cost, it also played a role in squeezing coal chemical industry. Therefore, when the oil price is at a low level, the price of plastic will be stronger due to the decline in the supply of coal to olefin.
The price of new material fell and the material was hit.

Most of the plastic products can be recycled and recycled, and polyethylene is no exception. The price of plastic recycling is often lower than the new material. It is in the economic factor, and many plastic products in the market, especially the low end products, should be part of the material. However, after the reuse of the material, it is difficult to avoid aging, the color is often yellowing, and the performance is not as good as the new material. Therefore, the use of feed back often affects the quality of the product. Generally speaking, the proportion of small and medium-sized private enterprises using recycled materials is relatively high, but in order to maintain their brand image, large enterprises often use a strict proportion of recycling. As the feed supply is not passed by the LLDPE production enterprise, the supply of this “grey area” is a part of the market for new materials.
Generally speaking, when the price of the returned material is less than 2500 yuan / ton of the new material price, there will be profit space for the return supplier. Because the LLDPE is at a high level in previous years, and the price of the returned material is relatively stable, so the profit of the plastic recycling enterprise is considerable. However, as the price of LLDPE falls down, the price difference between the new material and the Rematerial continues to shrink, and the advantage of the return is not obvious. For enterprises, when the price difference of new material and return material is large, it will increase the proportion of return material, and when the price difference between new material and return material is less, enterprises prefer to use new material. As the price of LLDPE falls, the market share of the material will be hit by the market, and the market will have “new” demand, which will support the price of plastic.
To sum up, although the crude oil will remain weak in the late period, the price advantage of coal chemical industry will disappear as oil prices fall. In addition, as the price of LLDPE continues to decline, the price advantage of recycled aggregate relative to the new material is also decreasing, and the market demand for new materials will increase. Therefore, under the combined action of the above two factors, plastic has a certain ability of self repair relative to other varieties. In the short term, the space of plastic prices is relatively limited, and it is expected to stabilize and rebound.