China’s PP, PE players diverge on demand; supply sparks shared concerns

With an absence of supply pressure thanks to maintenance turnarounds and talks of festivity-driven demand, polyolefin markets in China mostly closed November on a stable-to-firmer trend, if setting aside a $20/ton decrease on the low end of the LLDPE film range due to low-priced offers for US materials. However, sentiment remained cautious as market players diverged on demand expectations, while significant capacity expansions loomed large, fueling supply concerns.

Some suppliers test markets with hikes, citing better demand

According to a part of players, macroeconomic factors continued to have some positive influence on demand, with buying interest from the retail, food, and pharmaceutical sectors remaining supportive. Additionally, higher requirements for film packaging ahead of the Lunar New Year bolstered activity. Demand improvement fueled the latest increases in the import PP markets while partially contributing to the firm stance of local PE suppliers.

As for the week ending on November 29, import PP offers for both homo-PP raffia and inj. and PPBC inj. rose by $10-20/ton, and slight increases continued to be seen in China’s domestic PE markets. “We’ve raised PP offers to China as demand shows slight improvement, with buyers restocking for the Lunar New Year,” said a source from a Taiwanese producer. A trader added, “Economic factors continue to support demand, while maintenance shutdowns help keep supply in check.”

Others doubt demand improvement

On the other hand, many players remained cautious, citing sluggish overall demand amid China’s off-season and broader global stagnation, showing skeptical attitude toward demand revival for the year-end and spring festivals.

“Our factory is operating at around 70% capacity. Although we’ve seen higher end-user orders, PE demand remains weak due to the seasonal lull,” a converter commented. Another source opined, “With off-peak seasonality prevailing, buyers are only restocking for essential needs. Weak demand is dampening sentiment, and transactions remain limited.”

A seller based in Ningbo noted, “Global PP demand is stagnant. While China usually sees a year-end demand wave, this hasn’t materialized, leaving PP markets vulnerable to further weakness.” He added, “The same applies to PE markets, where buyer caution is limiting new purchases, leading to fewer concluded deals.”

Majority of players worry over future oversupply

Despite differing views on demand, players agreed that supply pressures are set to mount. Manageable availability has supported markets recently, but this is expected to shift with resumed operations, new capacity startups, and rising import arrivals.

A trader explained, “We expect inventories to build in the near term as maintenance plants restart and new production capacities come online.” Another trader added, “Imports are steadily arriving at ports. Combined with tariff concerns, this could lead to port inventory accumulation, intensifying supply pressure.”

As per data obtained from ChemOrbis Production News Pro, several November startups were postponed to late December, potentially offering a brief respite before significant capacity additions hit the market. China is set to bring online 3.31 million tons/year of PP and 3.85 million tons/year of PE capacity by the end of December.

In the meantime, the combined PP and PE inventories of China’s two major polyolefin producers witnessed an additional weekly decrease of 25,000 tons, breaking below the 600,000-ton threshold. Total polyolefin inventories were reported at 580,000 tons as of November 29, according to market resources.