China’s domestic LDPE film market tightens as production shifts to EVA

After a prolonged downtrend that began in early December 2024, domestic LDPE film prices in China have cautiously rebounded over the past two weeks. The key driver behind this recovery has been tightening supply, while improved sentiment—boosted by higher futures and signs of a demand pickup—has also supported the increase. However, overall demand has remained limited, preventing a stronger price upturn.

As for the week ending on February 21, prices were assessed stable on the low end, reflecting offers for locally-held Middle Eastern cargoes, while the high end, comprised of domestic-origin cargoes, rose by CNY75/ton ($11/ton).

Reduced supply due to production shift

Given China’s commitment to self-sufficiency with export orientation, most kinds of polymers have faced a supply overhang within the country. For PE, the continuous weakness in HDPE film has been a glaring demonstration of this development, while LDPE film has appeared to be the least affected of the three main PE film grades, especially as more producers have shifted to EVA production.

According to market sources, higher EVA prices encouraged producers to switch from LDPE to EVA production, leading to tighter supply for the former. A trader based in Guangzhou said, “Domestic PE prices are mainly stable, except for LDPE film. There is a lack of LDPE supply as some units have switched to EVA production to capitalize on rising prices.” Several other market players echoed similar observations.

EVA and LDPE share significant production similarities, with ethylene as the primary feedstock and vinyl acetate (VA) added for EVA. Many LDPE plants in China are equipped with swing production capabilities, allowing them to shift between LDPE and EVA based on market conditions. This flexibility has contributed to the current LDPE supply shortage.

Buyers show renewed interest

Demand has shown signs of improvement, with most factories resuming operations after the Lantern Festival in mid-February, leading to increased buying inquiries. Traders reported that buyers were actively seeking offers, and the number of concluded deals had risen. Despite this, purchasing remained need-based, and some factories had yet to reach full production capacity.

Market eyes potential demand recovery

Looking ahead, market players anticipate a potential demand revival for PE in China, driven by expectations of further increase in downstream operations. Hopes are also pinned on seasonal demand from March to May, the peak period for many PE applications such as packaging, construction, and agriculture, which could spur stronger buying interest.

However, several challenges persist. China’s economy remains fragile, with weak domestic consumption and concerns over an escalating trade war with the US. These uncertainties may limit demand growth and keep buyers cautious in the near term.