China, SE Asia PP outlook for 2026: Oversupply storm deepens as China’s export push accelerates

PP markets in China and Southeast Asia endured a difficult 2025 despite a brief stable-to-firmer start. Early strength quickly faded as structural weaknesses resurfaced, driving both markets toward 5.5-year lows by December. Against this backdrop, attention now shifts to the forces expected to shape the markets’ direction in 2026.

2025 key takeaways: A year dominated by bearishness

Psychological thresholds give way as prices collapse to multi-year lows

The PP markets in China and Southeast Asia largely entered 2025 on a stable-to-firmer note, but this strength proved temporary. From the second half of March onward, prices in both regions shifted into a persistent downtrend, interrupted only by sporadic rebounds triggered by temporary cost increases, macroeconomic, and geopolitical influences. As the year progressed, the market lost key psychological thresholds one after another, and sentiment steadily weakened in line with the deepening surplus.

By mid-December, PP prices in both markets had fallen to levels last seen during the pandemic, ChemOrbis Price Index shows. Compared with early-year indications, China’s import and export PP prices dropped by around 12-14%, while local prices posted deeper declines of roughly 15%.

A similar downturn unfolded in Southeast Asia, where import homo-PP raffia and injection prices retreated by about 14%, and PPBC injection fell by more than 11% over the same period. The region’s weekly averages for import PP touched their lowest levels in five and a half years, confirming the extent of the market erosion. The scale and consistency of the declines underscored how quickly early-year resilience gave way to entrenched bearishness.

What’s behind the curtain?

The year’s initial firmness was largely driven by constrained Middle Eastern availability, strong crude and feedstock values, and restocking ahead of the Lunar New Year. These factors supported sellers in maintaining a firm stance in the very first part of the year.

Throughout the year, supply jitters stemming from Middle East tensions and cost spikes encouraged producers to periodically push for higher prices. These attempts generated modest rebounds. Yet these recoveries quickly faded as underlying supply-demand fundamentals failed to provide a solid foundation.

Structural oversupply remained the dominant drag on market performance. China’s expanding PP capacities added significant length to the domestic market, prompting aggressive exports that exerted pressure on both local and regional prices. Demand remained insufficient to absorb the rising supply, as downstream industries operated with thin margins and limited appetite for stock-building.

Southeast Asia faced similarly weak fundamentals. Even as the region received steady inflows from China and other suppliers, local converters maintained hand-to-mouth buying due to poor order visibility and tight cash flow conditions. Intensifying competition among regional, Northeast Asian, and Middle Eastern sellers—particularly for raffia and injection grades—further heightened price pressure. Ample availability combined with sluggish consumption entrenched the bearish tone throughout 2025.

2026 outlook: Challenging year for price recovery

Structural oversupply and China’s accelerating export wave take center stage

Oversupply will remain the dominant theme in 2026, but the picture is now far more severe than in previous years due to China’s rapidly accelerating PP export momentum.
China exported more than 2.5 million tons of PP in the first ten months of 2025, sharply higher than the slightly-above-2-million-ton level seen in the same period of 2024, and more than double the roughly 1 million tons exported in January-October 2023. This three-year escalation underscores how aggressively China has turned to exports as a structural outlet for its growing surplus.

According to ChemOrbis Supply Wizard, the country commissioned 7.55 million tons of new PP capacities in the first eleven months of 2025, accounting for approximately 74% of global expansion, and an additional 5.05 million tons is expected to come online in 2026. These ongoing startups will sustain heavy domestic supply pressure and further strengthen China’s push to expand its exports.

Southeast Asia will remain a primary outlet for Chinese PP resins, given its role as China’s largest export destination. In the first ten months of 2025, Vietnam, Indonesia, and Thailand ranked first, second, and fourth among China’s PP export destinations, highlighting the depth of interdependence between the two markets. As new Chinese capacities come online next year, Southeast Asian markets are predicted to experience more intensified supply competition.

India’s growing presence as a major absorber of Chinese PP may play an important moderating role. According to ChemOrbis Stats Wizard, India imported around 99,480 tons of Chinese PP in 2024, while its intake surged to approximately 136,880 tons in the first ten months of 2025, despite the uncertainties related to BIS certification. With India now cancelling the BIS requirement, import flows from China are anticipated to become smoother and possibly larger in 2026.

If India continues to absorb rising volumes, China may allocate more PP there, potentially easing some pressure on nearby Southeast Asia. However, given the massive scale of China’s upcoming capacity additions, any relief is likely to be partial. Southeast Asia will remain highly sensitive to China’s export strategies, and the region is still expected to face heavy competition and abundant supply throughout 2026.

Demand recovery remains a bumpy road

Demand recovery in 2026 is anticipated to remain fragile across both China and Southeast Asia. Converters in China face inconsistent end-product orders and ongoing macroeconomic uncertainties, while many downstream sectors continue to operate at weak rates. In Southeast Asia, converters potentially adopt cautious, hand-to-mouth procurement strategies, constrained by limited order visibility and competitive pressure from Chinese finished goods.

As a result, overall PP consumption in both regions is likely to improve only modestly. Key end-use industries—including packaging, household goods, appliances, and automotive components—are expected to show uneven and selective growth, preventing broad-based restocking. Procurement behavior will remain conservative, keeping markets sensitive to oversupply and limiting the potential for any sustained price recovery throughout 2026.

Cost support potentially overshadowed

In addition, energy markets present mixed signals for 2026. Although some agencies have slightly raised their crude and gas forecasts due to geopolitical uncertainties, the broader consensus still points to subdued average oil prices. Continued supply growth from non-OPEC producers, coupled with muted global demand, is projected to limit any significant upside in crude.

This implies that cost support for PP producers will remain insignificant, providing only shallow and occasional relief. Even if feedstock costs rise intermittently, the structural oversupply and persistent demand weakness across China and Southeast Asia will likely overshadow any cost-driven gains. As a result, PP prices in both markets may struggle to achieve sustained upward momentum in 2026.