In the first half of this year, the prices of major domestic petrochemical products experienced overall increases amid fluctuations in international oil prices and related product markets. According to price monitoring data from 36 large and medium-sized cities, the average prices for polyethylene, polypropylene, polyvinyl chloride, polyester chips, and butadiene rubber were 13,009 yuan, 12,180 yuan, 7,222 yuan, 11,351 yuan, and 16,990 yuan respectively. These figures represent year-on-year increases of 10.81%, 6.95%, 2.88%, 6.63%, and 9.73%.
Looking ahead to the second half of the year, petrochemical prices are expected to remain elevated due to sustained high international oil prices. However, price movements will vary across different product types based on downstream demand and market dynamics. Several key factors are anticipated to influence the petrochemical market during this period.
First, continued high oil prices will support petrochemical pricing. Global refinery capacity, especially for clean gasoline, has expanded slowly, leading to tighter supply during peak seasons. This is likely to push up oil prices further in July and August due to tight gasoline supply and declining inventories. Additionally, summer weather disruptions could impact offshore oil production and transportation, while speculative funds may capitalize on panic-driven sentiment to drive prices higher. Although oil prices may dip in autumn, they are unlikely to fall sharply due to strong demand. Winter heating needs could once again push prices upward, keeping global oil prices high in the second half of the year.
Second, the broad application of petrochemical products and strong overall demand will also help maintain high prices. China’s rapid economic growth continues to fuel demand across sectors like construction, textiles, electronics, and automotive. In 2006, synthetic resin output reached 25.29 million tons, up 17.6% year-on-year, yet imports still accounted for 23.93 million tons. Similarly, domestic production of some synthetic fiber monomers fell short of demand, necessitating large imports. These factors will support long-term high prices for petrochemical products.
Third, the performance of downstream industries plays a crucial role in shaping petrochemical prices. In the first five months of this year, the chemical fiber industry saw a profit of 5.12 billion yuan, a 3.18-fold increase compared to the same period last year. The rubber products sector reported a profit of 6.07 billion yuan, up 56.44%. Output in these sectors grew significantly, with chemical fiber production rising by 17.9% and tire production increasing by 24.9%. This strong growth supports increased demand for petrochemicals. However, the plastic products industry showed more moderate growth, with output up only 14.2%, which may lead to more cautious purchasing behavior and limit further price increases.
Fourth, the gradual implementation of export tax rebate policies could exert downward pressure on certain petrochemical products. The reduction of the export tax rebate rate for plastics and rubber products to 5% is expected to raise costs for downstream industries, reducing their profitability and potentially affecting demand. Products like PVC, which face overcapacity in some regions, may see slower price growth or even declines in the second half of the year.
Lastly, the expansion of petrochemical production capacity is set to impact market dynamics. Over the past five years, China's polyethylene production capacity has nearly doubled, reaching around 6 million tons. With new plants coming online, including several large-scale polypropylene facilities, the domestic market is expected to face increased competition, which may affect future pricing of related products.
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