Summer lull drags on: China’s PP and PE markets stagnate amid supply glut, sluggish demand

China’s polyolefin markets are caught in a seasonal slowdown, with flat price trends prevailing across both domestic and import segments. Despite recent fluctuations in crude oil and feedstock markets, PP and PE prices largely held steady this week. The combination of long supply, weak demand, and cautious sentiment continues to weigh on market activity. While some players highlight policy support and expected capacity adjustments, these factors have yet to significantly shift the market’s trajectory.

PP markets: Stability on the surface, pressure beneath

Despite some slightly firmer import offers, domestic and import prices for homo-PP raffia and injection, and PPBC injection were unchanged from the previous week. Dalian futures remained largely directionless, while a mild uptick in crude failed to offset the softening in spot propylene, weakening cost support. “Supply is still long. Demand is weak due to poor downstream consumption," a domestic trader stated plainly, summing up market sentiment. Another trader added, “The market is expected to remain flat to lower in near term,” citing subdued buyer interest and stable but unremarkable transaction volumes.

The recent startup of Zhenhai Refining’s Line 4 has added to local supply, even as plant maintenance activities persist. A trader explained, “Although national subsidies and accommodative policies offer some stimulus, growth in both domestic demand and export orders remains relatively limited.”“Buyers are purchasing for basic needs only,” another trader said. “Done deals are average, and PP prices may fall further.”

Some traders indicated Middle Eastern producers are reallocating volumes away from China due to better netbacks elsewhere, yet this has not created any supply concerns as local buyers stick to domestic sources due to more competitive prices.

PE markets: Trapped in seasonal slump

All three major PE film grades, LDPE, LLDPE, and HDPE, saw no change in pricing this week across local and import markets. Futures activity was muted, and although crude oil edged up slightly, spot ethylene prices fell by $30/ton, undercutting cost support.

“Demand is still weak due to the off-season and summer lull,” one trader remarked, pointing to low transaction levels and restrained buyer activity. Another trader noted, “The market is expected to remain weak in July, as there are fewer inquiries and only need-based buying.”

While some producers curtailed output due to planned maintenance, others maintained normal run rates, contributing to an ongoing oversupply. “Even though local demand is weak, export demand is still normal,” a domestic seller shared, but added that competition from overseas producers, particularly from Saudi Arabia, was intensifying. A trader echoed, “The China economy is still weak due to consumption power being low.” Most deals were only completed after price concessions, and market participants largely agreed that any major rebound remains unlikely in the current season.