China, SE Asia PE outlook for 2025: Oversupply dilemma deepens with new capacity surge
by Merve Sezgün - msezgun@chemorbis.com

As 2024 draws to a close, major PE markets across Asia continue to face significant challenges driven by weak demand, a sluggish global economy, and persistent oversupply. This year has been particularly harsh for petrochemical producers, who have endured shrinking margins despite scaling back run rates or extending plant shutdowns.
Some producers in parts of Asia are considering permanent closures due to unviable economics, while others are reevaluating their strategies and seeking restructuring options to survive in a sector increasingly defined by chronic supply-demand imbalances.
2024 key price movements
HDPE film: Weakest performance
HDPE film struggled the most among the three PE film grades in 2024. In China, the weekly average of prices began the year at $975/ton CIF and peaked at $1030/ton in early June. The market then entered a prolonged decline, ending the year at $910/ton, the lowest level. In Southeast Asia, HDPE film prices saw a high of $1075/ton CIF in mid-March but fell steadily from late May, reaching a multi-year low of $940/ton in December.
LLDPE film: Volatile movements
LLDPE film exhibited more volatile movements compared to LDPE and HDPE, with moderate gains in the first half of the year offset by consistent declines in the second half. In China, prices reached the yearly high of $1015/ton by June, then slid to $945/ton by late July, marking the year’s lowest level. In Southeast Asia, LLDPE peaked at $1050/ton in mid-June. From then on, the market trended downward, ending December at $985/ton, the lowest level of the year.
LDPE film: Most resilient
LDPE outperformed its peers due to tighter availability. China’s import market peaked at $1180/ton CIF in June before dipping to $1100/ton by mid-August, the 2024 low. In Southeast Asia, prices rose from $1015/ton CIF in January to $1280/ton in mid-June. By December, prices had softened to $1175/ton but maintained a significant premium over HDPE and LLDPE.
What lies ahead in 2025?
The PE markets in China and Southeast Asia face a challenging landscape in 2025, shaped by shifting economic dynamics, chronically ample availability, and geopolitical factors. Import prices have been on a downtrend recently, reflecting intensified competition among suppliers. Year-end destocking, particularly by US exporters, has added to supply pressures, though Asian buyers remain cautious about stock-building, prioritizing cash flow heading into 2025.
Some players anticipate a temporary rebound in prices for the first quarter. This optimism is tied to producers potentially prioritizing margins over aggressive sales after year-end destocking, alongside demand support ahead of the Chinese New Year in late January. Traditionally, buyers in China and parts of Southeast Asia increase stock-building ahead of the holiday.
However, most participants agree that achieving a sustainable balance between supply and demand will remain elusive in 2025. Key hurdles include:
More capacity additions amid chronic surplus
New capacity additions, especially in China, are set to exacerbate the supply glut in Asia. Looking ahead to 2025, plans are in motion to introduce almost 5 million tons of PE in China – if not delayed, with a further 6.5 million tons slated for 2026. The total addition in the current year has been around 3 million tons, although almost half of it is yet to be launched and probably delayed to early 2025 in the face of poor economics. Many market players are bracing for heightened competition, particularly as China’s domestic output continues to grow rapidly.
Additionally, the influx of competitively priced US cargoes, backed by cheap ethane feedstock, will likely intensify pressure on regional producers who already face negative margins. Producers are concerned that the rising availability of US-origin PE in Asia could force further price erosion in 2025, unless new trade barriers - as promised by Trump - and retaliations hit PE markets.
Margin pressures persist
Faced with mounting losses, several Southeast Asian producers have already opted for prolonged shutdowns or capacity cuts this year. The disparity between the cash cost of ethylene from naphtha cracking and spot ethylene prices in the region has been in the negative territory for more than a year, according to C-Macc and ChemOrbis data.
These moves underscore the dire state of regional producers, many of whom are also exploring mergers, acquisitions, or shifts to more competitive feedstocks to survive. Without significant policy support or cost reduction strategies, plant closures may follow in 2025.
Geopolitical and trade risks
The return of Donald Trump as US president raises the specter of renewed US-China trade tensions. Proposed tariffs on Chinese goods could further strain an already fragile Chinese economy, which is grappling with a property market crisis, high debt levels, and deflationary pressures. Trade restrictions or retaliatory measures could exacerbate the challenges faced by regional PE producers, particularly those reliant on export markets.
Trump has announced plans to impose new tariffs on China, Mexico, and Canada, pledging to sign an executive order on January 20, introducing a 25% tariff on goods from Mexico and Canada. Additionally, he proposed a 10% tariff on all Chinese goods to address the export of fentanyl precursors, a move expected to escalate tensions with key trading partners.
Demand recovery: Hope or illusion?
A fundamental recovery in demand remains uncertain, as the weak global economy, subdued consumer spending, and drastic changes in consumption patterns continue to limit growth prospects for petrochemical products. The International Monetary Fund (IMF) has lowered its global growth forecast for 2025 to 3.2%, citing geopolitical risks and trade protectionism. Meanwhile, the Asian Development Bank (ADB) revised its 2025 growth forecast for developing Asia to 4.8%, reflecting weaker consumer spending and sluggish performance in key economies.
In China, demand remains under pressure despite a steady 4.5% growth forecast for 2025. The government’s latest policy measures—including a "moderately loose" monetary stance, tax incentives for housing, and procurement support for locally made products—aim to boost domestic consumption and mitigate potential impacts of renewed US trade tensions. However, these initiatives may take time to deliver results.
While there is some hope that China’s focus on self-reliance and fiscal support could spur regional demand, structural challenges and global economic headwinds suggest that any recovery in PE demand will likely be muted in 2025, especially for sectors tied to consumer and industrial activity.
Some producers in parts of Asia are considering permanent closures due to unviable economics, while others are reevaluating their strategies and seeking restructuring options to survive in a sector increasingly defined by chronic supply-demand imbalances.
2024 key price movements
HDPE film: Weakest performance
HDPE film struggled the most among the three PE film grades in 2024. In China, the weekly average of prices began the year at $975/ton CIF and peaked at $1030/ton in early June. The market then entered a prolonged decline, ending the year at $910/ton, the lowest level. In Southeast Asia, HDPE film prices saw a high of $1075/ton CIF in mid-March but fell steadily from late May, reaching a multi-year low of $940/ton in December.
LLDPE film: Volatile movements
LLDPE film exhibited more volatile movements compared to LDPE and HDPE, with moderate gains in the first half of the year offset by consistent declines in the second half. In China, prices reached the yearly high of $1015/ton by June, then slid to $945/ton by late July, marking the year’s lowest level. In Southeast Asia, LLDPE peaked at $1050/ton in mid-June. From then on, the market trended downward, ending December at $985/ton, the lowest level of the year.
LDPE film: Most resilient
LDPE outperformed its peers due to tighter availability. China’s import market peaked at $1180/ton CIF in June before dipping to $1100/ton by mid-August, the 2024 low. In Southeast Asia, prices rose from $1015/ton CIF in January to $1280/ton in mid-June. By December, prices had softened to $1175/ton but maintained a significant premium over HDPE and LLDPE.

What lies ahead in 2025?
The PE markets in China and Southeast Asia face a challenging landscape in 2025, shaped by shifting economic dynamics, chronically ample availability, and geopolitical factors. Import prices have been on a downtrend recently, reflecting intensified competition among suppliers. Year-end destocking, particularly by US exporters, has added to supply pressures, though Asian buyers remain cautious about stock-building, prioritizing cash flow heading into 2025.
Some players anticipate a temporary rebound in prices for the first quarter. This optimism is tied to producers potentially prioritizing margins over aggressive sales after year-end destocking, alongside demand support ahead of the Chinese New Year in late January. Traditionally, buyers in China and parts of Southeast Asia increase stock-building ahead of the holiday.
However, most participants agree that achieving a sustainable balance between supply and demand will remain elusive in 2025. Key hurdles include:
More capacity additions amid chronic surplus
New capacity additions, especially in China, are set to exacerbate the supply glut in Asia. Looking ahead to 2025, plans are in motion to introduce almost 5 million tons of PE in China – if not delayed, with a further 6.5 million tons slated for 2026. The total addition in the current year has been around 3 million tons, although almost half of it is yet to be launched and probably delayed to early 2025 in the face of poor economics. Many market players are bracing for heightened competition, particularly as China’s domestic output continues to grow rapidly.
Additionally, the influx of competitively priced US cargoes, backed by cheap ethane feedstock, will likely intensify pressure on regional producers who already face negative margins. Producers are concerned that the rising availability of US-origin PE in Asia could force further price erosion in 2025, unless new trade barriers - as promised by Trump - and retaliations hit PE markets.
Margin pressures persist
Faced with mounting losses, several Southeast Asian producers have already opted for prolonged shutdowns or capacity cuts this year. The disparity between the cash cost of ethylene from naphtha cracking and spot ethylene prices in the region has been in the negative territory for more than a year, according to C-Macc and ChemOrbis data.
These moves underscore the dire state of regional producers, many of whom are also exploring mergers, acquisitions, or shifts to more competitive feedstocks to survive. Without significant policy support or cost reduction strategies, plant closures may follow in 2025.
Geopolitical and trade risks
The return of Donald Trump as US president raises the specter of renewed US-China trade tensions. Proposed tariffs on Chinese goods could further strain an already fragile Chinese economy, which is grappling with a property market crisis, high debt levels, and deflationary pressures. Trade restrictions or retaliatory measures could exacerbate the challenges faced by regional PE producers, particularly those reliant on export markets.
Trump has announced plans to impose new tariffs on China, Mexico, and Canada, pledging to sign an executive order on January 20, introducing a 25% tariff on goods from Mexico and Canada. Additionally, he proposed a 10% tariff on all Chinese goods to address the export of fentanyl precursors, a move expected to escalate tensions with key trading partners.
The US and China are critical for each other in PE trade as China’s number 1 import supplier is the US, and the US’ top export destination is China with both of them having less than 20% share in each other’s respective trades. In a scenario where US-origin polyethylene does not find its way to the China market next year as a part of this trade war coming, this will do more harm to the US than it does to China. This is because China already has capacities coming, plus Saudi Arabia - as the runner-up to China’s leading PE supplier - will gladly fill the gap left by the US. On the other hand, the US will have more challenges diverting almost 20% of its exports to other partners. This may exert further pressure on the rest of the world, particularly Southeast Asia.
Demand recovery: Hope or illusion?
A fundamental recovery in demand remains uncertain, as the weak global economy, subdued consumer spending, and drastic changes in consumption patterns continue to limit growth prospects for petrochemical products. The International Monetary Fund (IMF) has lowered its global growth forecast for 2025 to 3.2%, citing geopolitical risks and trade protectionism. Meanwhile, the Asian Development Bank (ADB) revised its 2025 growth forecast for developing Asia to 4.8%, reflecting weaker consumer spending and sluggish performance in key economies.
In China, demand remains under pressure despite a steady 4.5% growth forecast for 2025. The government’s latest policy measures—including a "moderately loose" monetary stance, tax incentives for housing, and procurement support for locally made products—aim to boost domestic consumption and mitigate potential impacts of renewed US trade tensions. However, these initiatives may take time to deliver results.
While there is some hope that China’s focus on self-reliance and fiscal support could spur regional demand, structural challenges and global economic headwinds suggest that any recovery in PE demand will likely be muted in 2025, especially for sectors tied to consumer and industrial activity.
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