China’s local PP, PE prices hold largely flat post-holiday amid slow restart; futures rally in focus

China’s domestic PP and PE markets are currently caught between strengthening cost support and still-soft post-holiday supply-demand conditions. Spot prices have largely held steady following the Lunar New Year break despite a strong rebound in futures, as most sellers remain cautious and prefer to gauge real demand before adjusting offers. Trading activity is subdued in the first week after the holiday, a seasonal pattern, with many downstream plants yet to fully resume operations.

Although inventories surged during the break, an early drawdown has emerged, suggesting that supply pressure could ease if destocking continues.

Higher futures, stronger costs underpin sentiment

After a week-long closure for the Lunar New Year holiday, the Dalian Commodity Exchange reopened with consecutive gains in both LLDPE and PP contracts. After two sessions, LLDPE futures rose by CNY154/ton ($22/ton), while PP futures climbed CNY183/ton ($27/ton). According to market sources, firmer futures have lent psychological support to the market and encouraged some sellers to test higher offers.

Upstream dynamics have also turned supportive. Escalating geopolitical tensions between the US and Iran pushed oil benchmarks higher, with Brent crude breaking the $70/bbl and $71/bbl thresholds to reach its highest level since July 2025, ChemOrbis data shows. Meanwhile, spot propylene and ethylene prices on CFR China edged up by $10/ton after three weeks of stability, strengthening cost pressure.

Muted demand amid lingering holiday lull

While market participants gradually return to their desks this week, downstream operations have resumed only partially. Many factories are still running at reduced rates, and some remain shut, with restarts anticipated next week. This slow normalization has restrained both demand recovery and destocking activity.

Traders widely reported a cautious market tone. One of them noted, “Downstream plants have yet to fully resume operations, keeping overall trading subdued. Although demand is expected to recover step by step as buyers return, most participants are currently adopting a wait-and-see stance.”

A Zhejiang-based trader echoed similar views, saying, “Some factories remain offline due to weak end-user demand and are scheduled to restart gradually next week. There are limited inquiries, since buyers are mainly staying on the sidelines.”

Meanwhile, a trader in Xinjiang observed that most downstream enterprises have only resumed administrative functions, with production lines operating to a limited extent. He added, “Full production resumption is expected in early March. Compared with pre-holiday conditions, overall supply-demand fundamentals have softened, amplifying the cautious sentiment across the market.”

Huge inventory buildups weigh on supply landscape

Following extended holidays in China, combined polyolefin inventories typically surge due to the mismatch between continuous upstream production and suspended downstream operations. On the first trading day after the Lunar New Year break, 24 February 2026, total PP and PE inventories were reported at 940,000 tons—more than doubling over the holiday period and underscoring the scale of supply pressure facing the market.

However, inventories fell by 65,000 tons just one day later, signaling that some buyers have begun to re-enter the market for restocking, even if cautiously. While the holiday lull continues to curb active trading, this initial drawdown suggests that the market may gradually absorb part of the surplus as downstream factories resume operations.