Overview:
Driving force of LL1-5 reverse arbitrage: the industrial structure determines that the pricing benchmark gradually tends to the upper limit of the external anchor. The current spot side import arbitrage window has been opened from time to time, and the marginal supply pressure has increased significantly. When the industrial chain inventory enters the accumulation cycle, the spot goods will face greater pressure.
We mainly examine this position from the following four aspects:
1. Internal and external price difference. With the maturity of light hydrocarbon cracking technology in the outer disk and the improvement of ethane industrial chain equipment, a large number of North American ethane cracking to olefin units have hit the overseas market since 2018. Domestic imports Plastic The price continues to decline, and the internal and external price difference has changed from being upside down all the year round to being in order all the time. The opening of the arbitrage window has become the biggest pressure on marginal supply.
2. Inventory. After the National Day holiday this year, with the resumption of production of a large number of devices, the inventory has accumulated significantly. After more than a month of destocking cycle, although the downstream is still in the peak season, the demand side has become weak, and the inventory of the industrial chain has begun to accumulate.
3. High demand season. The demand in peak season is the main driving force for the continuous premium of spot goods and early stock removal. However, the current downstream construction has reached a high level, and the future marginal demand will decrease.
4. Margin of safety. Judging from the current non-standard price comparison and LL1-5 historical price difference trend, non-standard prices are close to the level, and the cost advantage of non-standard spot end is obvious. The 1-5 price difference is at a high level compared with the previous two years, which is also the maximum value of this year. There is a certain margin of safety for the current point to choose to shrink the LL1-5 price difference.
Considering the drive and safety margin comprehensively, LL1-5 reverse sleeve has high operability, and the risks that need to be guarded against mainly come from unexpected maintenance of production devices and non-standard mass production change.
1、 The window of import arbitrage opens, and the marginal supply of spot goods picks up
In 2018-19, the release of PE external capacity is the most important reason for the continuous downward shift of L's focus. The industrial structure of domestic plastics has changed under the impact of constantly reducing the cost of imported goods.
This year's LL's external dependence was 40.42%, while last year's external dependence was only 30%. The growth of import volume combined with the decline of domestic standard product output led to the transformation of domestic supply structure, and the price of imported goods became the ceiling anchor standard of internal pricing.
Judging from the current internal and external price difference, the imported plastic CFR Gold price At 1141 dollars/ton, the spot side import profit is about 50-100 yuan/ton. The arbitrage window has been opened. The marginal supply at the import side is expected to increase in November, while the spot side is about to bear pressure.
Figure 1: LL output and external dependence
Source: Guohai Liangshi Futures Research Institute
Figure 2: LL internal and external price difference
Source: Guohai Liangshi Futures Research Institute
2、 Accumulation of spot stocks has eased the tension between supply and demand
September of this year is the last month for the planned large-scale overhaul of domestic production devices. In October, there are few intensive overhauls. On the National Day, downstream and terminal enterprises have holidays. Therefore, after the resumption of production of intensive maintenance devices in September, the industrial chain has been in the state of de stocking, with the demand of downstream agricultural film peak season superimposed throughout October.
However, when the supply of LL standard products is still sluggish, the industry chain has begun to accumulate inventory, which shows that the pressure on the spot side has become prominent. Therefore, from the perspective of future supply and demand gap, the tight balance pattern will gradually shift to wide balance.
Figure 3: PE Industry Chain Inventory
Source: Guohai Liangshi Futures Research Institute
Figure 4: Standard product output
Source: Guohai Liangshi Futures Research Institute
3、 Downstream construction starts at a high level and marginal demand decreases
On the demand side, the current operating rate of downstream agricultural film has reached 68%, which is at a very high value. Judging from the pace of construction in previous years, the agricultural film has obvious differences between light and peak seasons. Generally, after November, the construction rate will begin to decline gradually. Even if the demand side of the future market can be maintained, the marginal increment of demand will be relatively limited.
Therefore, from the seasonal point of view, the spot demand will weaken marginally.
Figure 5: Operating rate of downstream agricultural film
Source: Guohai Liangshi Futures Research Institute
4、 Weak non-standard support
From the perspective of non-standard price difference, the price difference between LL and HD is close to the level, while the price difference between LL and LD has slightly rebounded from the level to around 200 yuan/ton. Therefore, from the perspective of production efficiency, the profit of production conversion may be relatively good. The price difference between LD and LL is close to the level, which will encourage some enterprises to choose better LD, and the substitutability of membrane materials will be highlighted.
The decline of non-standard price will make the supply side production scheduling heavier, and the output rate of standard products in the future market will rise, and the spot will continue to be under pressure.
Figure 6: Price difference of non-standard HD injection molding
Source: Guohai Liangshi Futures Research Institute
Figure 7: Non standard LD price difference
Source: Guohai Liangshi Futures Research Institute
5、 LL1-5 The year-on-year high price difference provides a margin of safety
Looking back at the historical price difference of LL1-5, it was the peak period of domestic production capacity before 2016, so the monthly difference had too much premium in recent months. Later, the highest 1-5 price difference reached nearly 700 in the soft closing market in 2016.
At present, the 1-5 price difference has reached 450-480, which is at a high level compared with the previous years. It is also the maximum monthly difference this year. Therefore, considering the safety margin of shrinking the LL1-5 price difference, the current position has a relatively reliable operability.
Figure 8: LL1-5 Price Difference
Source: Guohai Liangshi Futures Research Institute
5、 Summary and operation
Therefore, the spot pressure on both sides of supply and demand will increase in the future market, and the LL1901 contract in the near month may become weak. Considering the driving force and margin of safety, since there is no arbitrage preference, the total margin ratio is controlled within 40%, the entry is 400-600, the stop loss is 700, and the target price difference is 100.
Guohai Liangshi Futures Team 2
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Editor in charge: Song Peng
