China’s PE markets in limbo: Resilient supply chain faces tepid buying

China’s PE market is navigating a complex landscape of cost fluctuations, supply disruptions, and weak seasonal demand. In the week ending on June 27, import and local markets remained firm, except for the softening at the high end of local LLDPE range. Sellers seemed to be holding on to the strong spot ethylene market despite the slump in Brent crude and Dalian futures.

Despite Brent crude futures plunging 12% on the week as of June 26, CFR China spot ethylene prices rose $20/ton, continuing their rally to a three-month high—up $70/ton in the past two weeks—highlighting robust upstream strength in contrast to a bearish energy market.

Local PE markets: Stronger bias on shaky ground

In the week ending on June 27, China’s domestic PE market largely saw a firm pricing trend, with LDPE leading gains. LLDPE showed bifurcated movement with low-end prices rising by CNY150/ton ($21/ton) while high-end slipped CNY100/ton ($14/ton) compared to a week earlier, reflecting uneven demand. HDPE was stable to CNY90/ton ($13/ton) higher despite oversupply and continued weak downstream demand.

On the supply front, the combined polyolefin inventories of China’s two major producers stood below the 750,000 tons threshold on June 26, indicating marginal weekly and daily declines. Players widely noted poor trading activity and buyer hesitation. “Demand is still weak due to off-season, and less buyers are willing to ask for offers,” said a source from a producer.

However, a slightly stronger bias was noted thanks to firm cost support and upcoming regional maintenance. A trader commented, “Operating rates of downstream PE industries are expected to remain largely stable, with prices fluctuating slightly stronger due to cost support.” Despite this, many expect the market to stay flat near term, as gains remain capped by weak sentiment and fragile export orders.

Meanwhile, as of June 26, September Dalian LLDPE futures fell by CNY154/ton ($21) weekly, reflecting bearish sentiment in the broader PE market.

Import PE markets: Mixed signals across borders

Last week in the import market, players reported varied pricing strategies from key suppliers. A major Saudi producer’s July offers reflected this divergence, raising LDPE film by $30/ton and HDPE film by $20/ton, while trimming LLDPE film by $10/ton.

Weekly offers from the Middle Eastern suppliers were stable to $10/ton higher from the previous week for LDPE film, unchanged for HDPE film, and $20-30/ton higher for LLDPE film as of June 26. Iran offers, meanwhile, were $10-20/ton higher compared to a week earlier for LDPE film and flat for HDPE film. “LDPE increased more than LL and HD because Iran supplies a lot of LDPE, and now supply is tightening amidst geopolitical tensions,” explained a trader.

Still, most players remained wary, citing reduced buying interest and limited import offers. “There are fewer ME offers now, while US offers are absent; producers prefer exporting to Southeast Asia for better prices,” said one trader. “Done deals are not ideal, as buyers only purchase for basic needs.” Despite slight improvements in sentiment, import activity remained largely stagnant.

Early week outlook: Supply is reduced but demand still mired in weakness

As the new week began, China’s local PE market continued to face downward pressure from a persistent slump in upstream energy and futures markets. Brent crude futures extended losses, falling 12% weekly to settle at $67.77/bbl on June 27, as geopolitical tensions between Iran and Israel eased and U.S.–China trade talks took on a more cooperative tone. Dalian September LLDPE futures also declined by CNY136/ton ($19/ton) on a weekly basis as of June 30, reflecting fragile investor confidence. “Local prices softened slightly in response to these declines, but sellers are watching ethylene closely for direction,” said a domestic trader.

Despite these bearish indicators, polyolefin inventory levels at China’s two main producers saw a steep 90,000-ton drop from the prior week, settling at 720,000 tons by June 30. This marked an 11% weekly decrease, signaling modest replenishment activity as some buyers returned early to hedge against further price recovery. However, most players remained cautious. A trader commented, “We’re still seeing long supply, especially for LLDPE and HDPE, and demand is not keeping pace—both local and export orders are underwhelming.”

Meanwhile, a trader dealing in imported goods added, “We still don’t have many import offers in the market, especially from the US, but buyers are also scarce.” The market’s near-term direction remains unclear, as cost support clashes with sluggish demand fundamentals. “Sentiment has slightly improved with recent rebounds in related sectors like ferrous metals, but macro positivity hasn’t yet translated into real buying,” a seller noted. A trader summed up the cautious mood: “Done deals are average at best. Until demand shows real signs of recovery—likely not until after summer—the market is expected to stay largely range-bound.”