China-SEA import LDPE, HDPE price gaps substantially narrow; LLDPE remains wide

PE markets in China and Southeast Asia remained on a soft footing in early May, with LDPE, HDPE, and LLDPE film grades either edging lower or hovering at multi-year lows. In China, LDPE and HDPE film resumed their downtrend after a brief period of stability, while LLDPE managed to stabilize. Southeast Asia’s PE markets saw further decreases, though the pace of decline slowed. As of the week ending May 9, the price gap between the two regions narrowed considerably for LDPE and HDPE films, while LLDPE film retained a relatively wide differential.

Muted demand and ongoing supply pressure were key contributors to the overall weakness. Buyers in both regions continued to make purchases only as needed, reinforcing sluggish trade activity and slowing inventory drawdowns. “The market entered May with further price reductions. Despite the lower levels, we are only buying what’s needed for immediate use,” a PE converter in Southeast Asia commented.

LDPE, HDPE gaps shrink visibly

According to weekly average data from ChemOrbis Price Index, Southeast Asia’s import LDPE film was $65/ton above China’s level last week, while the HDPE film gap contracted to just $33/ton. Compared to mid-April, these represented declines of $35/ton for LDPE and a more dramatic $80/ton for HDPE.

The narrower deltas might reduce the arbitrage window for traders attempting to re-export cargoes from China to Southeast Asia, especially for HDPE film, where the slim margin barely covers freight and logistics costs. This development potentially eases competitive pressure on regional suppliers in Southeast Asia who faced a flow of aggressive Chinese re-exports.

LLDPE delta remains substantially wide

In contrast to LDPE and HDPE, LLDPE film imports in Southeast Asia still trade at a considerable premium of $88/ton over China, where prices hovering at their nearly five-year lows, ChemOrbis Price Index shows. This big spread is likely to encourage further re-export flows from China into the region, especially as Chinese sellers seek to alleviate high domestic inventories. Plus, US sellers might continue to target Southeast Asia over China to enjoy better netbacks.

The potential influx of supply from both China and the US keeps SEA’s LLDPE film market under heightened pressure, with many buyers expecting further price declines. For regional suppliers, this means intensified competition and shrinking margins, particularly as demand in the region remains constrained by underperforming downstream sectors and macroeconomic headwinds.

US-China trade truce: A possible game changer

In the meantime, eyes are on the recently announced 90-day trade truce between the US and China, which includes temporary tariff reductions. This easing of trade barriers could influence PE supply and demand in both China and Southeast Asia in the near term.

On the demand side, Chinese converters—particularly those in export-oriented sectors such as packaging and consumer goods—may ramp up production in anticipation of increased US orders. This could lift consumption of PE resins in the country. Similarly, a more optimistic global trade outlook might encourage Southeast Asian converters to restock inventories or boost operations, potentially reviving demand across the region.

On the supply side, the reduced tariffs lower the cost of US-origin PE entering China, likely prompting a rise in import supply from the US. However, given the still-wide price gaps—particularly for LLDPE and LDPE film—US sellers may continue to favor Southeast Asia, where margins remain higher. This could prolong the current oversupply pressure in SEA, limiting any significant price rebound despite potentially improved sentiment.