China’s PE market at crossroads: Import strength counters domestic weakness going into Lunar New Year

China’s PE markets moved along diverging paths in the week ending February 13, right before players left their desks for the Lunar New Year holidays that have started this week, reflecting contrasting dynamics between local and import segments. While overseas suppliers continued to push prices higher amid tighter import availability, domestic prices softened under the weight of weakening demand as downstream players gradually entered the Lunar New Year holiday period.

The early onset of holiday closures dampened consumption in several key sectors, though sentiment remained mixed across the market. Some players reported a slowdown in procurement activity, while others pointed to improving downstream operations and rising finished product prices as reasons for optimism. As a result, the market entered a transitional phase, with short-term caution prevailing domestically even as expectations for a post-holiday rebound supported import pricing.

Import gains persist while local trend reverse course

Domestic PE prices shifted into a softer trend over the past week, reflecting the growing impact of seasonal demand weakness. Local LDPE film prices fell by up to CNY150/ton following three consecutive weeks of stability, marking a change in direction. HDPE film prices also reversed their earlier firm trend seen since early January, slipping by up to CNY50/ton, while LLDPE film extended its decline for a second straight week with similar losses.

In contrast, import PE markets maintained their upward trajectory, supported by constrained availability and firmer supplier sentiment. Import LDPE and LLDPE film prices rose by up to $20/ton, extending gains into a second consecutive week, while HDPE film prices climbed by $10-30/ton, marking the fifth straight week of increases. Suppliers, particularly from the Middle East and South Korea, continued to test higher offers amid expectations of stronger post-holiday demand.

Market participants offered mixed assessments regarding price developments. A trader noted, “Our local prices fell slightly as demand continued to weaken with players leaving for holidays,” highlighting the seasonal slowdown in domestic activity. Meanwhile, sentiment in import markets remained comparatively upbeat. A trader handling Saudi-origin cargoes said, “Import offers climbed higher, lifted by renewed demand. Buying sentiment remains positive, with some restocking anticipated post the CNY.” Similarly, a source from a South Korean producer reported hiking offers further, citing improved regional demand and rising downstream operating rates.

Holiday slowdown tempers demand as supply expectations and sentiment diverge

A combination of seasonal demand slowdown and evolving supply expectations shaped market dynamics during the week. As the Lunar New Year approached, many converters gradually shut down operations, reducing immediate consumption needs. Logistics and transportation activity also began slowing, further limiting market transactions. A trader explained, “Feedstock procurement for agricultural film production is essentially complete for this week, leading to an overall decline in demand,” adding that increased supply from upcoming unit restarts could exert additional pressure on prices. Indeed, planned restarts at major facilities, including Guangdong Petrochemical, Sinochem Quanzhou, and Sinopec-INEOS, reinforced expectations of rising domestic supply.

At the same time, market indicators presented a mixed picture. While polyolefin inventories initially remained below 450,000 tons on Februart 12, when the latest price assessments were made, a subsequent increase in domestic stocks on February 13, when the latest inventory data were revealed, pointed to slowing consumption. Dalian LLDPE futures also edged slightly lower, reflecting cautious sentiment, while flat ethylene prices provided limited cost support.

Nevertheless, some players remained optimistic about post-holiday prospects. A buyer commented, “Bullish sentiment lifted buying, with more buying anticipated after the holidays. Downstream derivatives also improved, with operating rates slowly ramping up.” This divergence in outlook reflected a market caught between short-term seasonal weakness and expectations of stronger demand recovery once downstream sectors resume full operations after the holiday period.