Oversupply pressure averts futures, year-end demand support in China PE markets

China’s PE markets closed out the year on a softer note, with prices extending their downward trajectory, breaking below new thresholds, amid muted trading activity. Both local and import segments reflected continued weakness, as lower prices and year-end considerations shaped buying behavior.

While some downstream players stepped in to replenish stocks for January and the post-Chinese New Year period, overall volumes remained limited. Against this backdrop, market participants continued to assess futures movements, supply developments, and inventory levels heading into the new year.

Local prices slide further; LDPE sees largest drops

In the local market, LDPE film prices fell by CNY150-360/ton ($21-52/ton) from last week, while HDPE and LLDPE film prices were stable to CNY100/ton ($14/ton) lower. According to ChemOrbis data, prices for LDPE and LLDPE film softened for the third consecutive week, while HDPE film declined for the fourth straight week. The weekly average price for LDPE remained at over 2.5-year lows, while LLDPE and HDPE continued to hover at more than five-year lows.

Futures gains contrast with domestic supply concerns

May LLDPE futures on the Dalian Commodity Exchange gained CNY174/ton ($25/ton) between December 23 and 30, offering limited support to sentiment. Meanwhile, CNPC and Sinopec’s combined polyolefin inventories stood at 600,000 tons on December 30, up 20,000 tons from the previous day, but 110,000 tons lower than a week earlier. Although lower prices encouraged some year-end restocking, participants noted that buying interest remained selective and insufficient to absorb ongoing supply pressure.

Supply developments continued to draw close attention. Around 672,000 tons of PE capacity remained offline in December due to maintenance across China, a figure expected to decline to 505,000 tons in January as plants resume operations, according to ChemOrbis Supply Wizard. At the same time, around 500,000 tons/year of new PE capacity is scheduled to come onstream in January, reinforcing expectations of rising oversupply.

A trader said, “A slight increase in supply is expected. The pace of new maintenance plans is slowing, and with China’s large existing production capacity, ample market supply remains a major factor weighing heavily on the market. Year-end cash recovery pressures are constraining trading activity and limiting volume growth.”

Overseas suppliers issue further discounts on weaker buyer interest

In the import market, the overall LDPE film price range was $10/ton lower, with Middle Eastern and Iranian offers down by $20-30/ton on a weekly basis. The overall HDPE film range was stable, although Middle Eastern and Iranian prices slipped by $20/ton. LLDPE film prices declined by $10-20/ton overall, with Middle Eastern offers down $20-30/ton, while ASEAN prices were stable to $10/ton lower.

According to the ChemOrbis Price Index, import LDPE and LLDPE film ranges softened for the second straight week, while the HDPE film range stayed flat for the seventh consecutive week, despite declines in origin-based indexes. LDPE remained at over 2.5-year lows, and LLDPE and HDPE continued to hover at more than five-year lows.

A source from a major Saudi Arabian producer commented, “The market was affected by the short trading week, with subdued activities. At the same time, falling domestic prices reinforced the bearishness, prompting participants to concentrate trading in the local market and further dampening interest in import transactions.” Meanwhile, the major producer announced their January PE offers to China this week with drops of up to $60/ton compared to December.