China’s PE recovery lags as demand falls short amid oversupply woes

China’s PE markets remained largely stable this week, as the Mid-Autumn Festival holiday slowed trading activity and led to a further buildup in domestic inventories. The modest price gains from the previous week faded, with seasonal demand falling short of expectations, dampening hopes for a more robust recovery.

Cautious recovery since late August

Import PE film prices have been on a cautious upward trend since late August, but gains have been modest as demand failed to pick up during the typically strong "Golden September-Silver October" season. According to ChemOrbis Price Index data, LDPE film prices have risen by 5% over the past month, LLDPE film by 3%, while HDPE film saw only a 1% increase.

For the week ending September 20, import prices for all origins held steady. LDPE film was assessed at $1090-1220/ton, HDPE film at $890-980/ton, and LLDPE film at $920-1020/ton, all on a CIF China, cash basis.



Agriculture and packaging sectors provide limited support

Demand has remained lackluster overall, though certain sectors, such as agriculture and packaging, have shown improvement. “The agricultural sector has been a bright spot with increased demand for film applications, and the packaging sector, especially for food and pharmaceuticals, has shown resilience,” noted a source from a domestic PE producer. However, this was not enough to offset broader market weakness.

Many converters restocked ahead of the Mid-Autumn Festival holiday, but there was still a cautious outlook. One converter noted, “Buyers are adopting a wait-and-see approach, only making purchases when prices align with their expectations. While agriculture and packaging demand help support prices, the market overall remains weak.”

Oversupply persists, except for LDPE film

China’s two major polyolefin producers saw their combined PP and PE inventories rise for the third consecutive week, reaching 775,000 tons by September 20—20,000 tons higher than the previous week. Despite destocking around 50,000 tons after the holiday, inventory levels remain significantly above last year’s figures.

“Demand has been tepid, and downstream restocking interest is limited. With operating rates remaining high, slow destocking is expected to persist,” said a market player. Capacity expansions scheduled toward the end of the year will add further supply pressure, increasing the challenge for sustained price gains.

“The market is under pressure from high inventories, and this could limit any price increases in the short term. Although some plants are scheduled for maintenance, the upcoming National Day holiday in early October may lead to further stock accumulation as production continues,” a trader also commented.

On the other hand, LDPE film supply has been relatively tighter compared to other PE film grades, leading to larger price increases than those seen for HDPE and LLDPE film.

Outlook remains cautious

Looking ahead, market players are cautious about the likelihood of a sustained price recovery. While the fourth-quarter peak season traditionally brings improved demand, it has yet to generate a meaningful market rebound. Moderate restocking after the holidays could offer some support, but high inventory levels and increased production capacities continue to pose significant challenges.