But why we say the chance for a strong rebound is small? The main reason lies on the fundamentals

But why we say the chance for a strong rebound is small? The main reason lies on the fundamentals.

First of all, China's PE imports are large and sufficient. The total import of PE in January-May 2019 reached 6.8802 million tons, an increase of 18.3% over the same period of last year. Especially in the past three months, the monthly import volume was over 1.4 million tons. It is a figure that has not appeared in history, and the impact on traders and downstream mentality is quite obvious.

In addition, the downstream off-season has been extended, whether it is a write-off factories (process imported raw materials and export finished goods) or ordinary factories, the purchase of US dollars is appropriately reduced due to insufficient orders. Then, consumption is not able to digest the huge amount of imports in the previous period. The growth in demand is far less than the growth in supply.

Taken them together, the short-term rebound of PE CFR China market is supported by its own low cost, lower price gap with domestic cargoes, and macro-optimal effects. However, in the long run, supply in the CFR China market is still surplus, and the rebound is not sustainable.