Trade truce meets market reality: China’s polymer markets stay cautious

China’s polymer markets have shown limited response to the recent reciprocal tariff cuts between the US and China, as market participants remain skeptical about the temporary trade truce’s ability to reverse bearish fundamentals. Oversupply and persistently weak demand, conditions that existed even before the trade dispute, continue to weigh on sentiment for most polymers.

Still, some cautious optimism has emerged. A few traders slightly raised their local PE, PP, and PS offers this week, supported by an almost 8% weekly increase in Brent crude futures, which settled near the $65/bbl mark on Monday, May 12. Policy moves, including reductions in reserve requirements and interest rates, also offered limited support. “Markets are caught between weak supply-demand fundamentals and policy-driven optimism,” one trader commented.

Truce fuels mixed sentiment in PP, PE markets

This week, PP and PE offers have largely remained stable to softer across import, export, and local markets.

On the import front, LDPE prices were seen as stable to slightly lower, while HDPE and LLDPE prices held mostly steady. Homo-PP raffia and injection grades followed a similar trend, showing stable to slightly softer levels. PP block copolymer (PPBC) injection prices remained unchanged week over week. In the local market, players reported stable to slightly lower offers for all PE film and PP grades. Export prices also stayed largely flat from the previous week.

“There have been some bullish voices in domestic markets,” reported a converter who received stable to slightly firmer HDPE and LLDPE offers, while LDPE held steady. “As the off-season winds down, we’ve seen a pickup in inquiries, but buying remains limited to essential needs. Feedback on the tariff cuts is still minimal, and the near-term outlook suggests flat pricing,” he added.
A trader also reported a slight increase in their domestic prices, citing the recent trade truce. “Temporary tariff cuts have pushed crude oil and Dalian futures up, supporting our pricing strategy. We believe that this support will continue for a while,” the trader noted. September LLDPE futures on the Dalian Commodity Exchange recorded a weekly gain of CNY139/ton ($19/ton), while PP futures saw a relatively small increase of CNY52/ton ($7/ton) as of May 13.

In contrast, many players held a bearish outlook amid ongoing demand uncertainty. Trading has slowed since the Labour Day holiday, with end-user orders falling and suppliers reducing prices to stimulate sales. “We expect prices to trend slightly lower in the near term,” a trader said.

On the supply side, widespread plant maintenance offered temporary relief from pressure, but inventory buildup after the holidays continues to weigh on the market. The maintenance impact is also expected to fade this week. As of May 13, the combined polyolefin inventories at China’s two major producers were 10,000 tons higher from a week earlier at 840,000 tons, indicating sluggish trading. Meanwhile, spot propylene and ethylene prices on a CFR China basis remained flat, showing no reaction to the crude rebound, underscoring the market’s cautious mood.

Another trader noted a potential market stagnation, with sellers withholding offers and buyers already staying on the sidelines. “It’s been heard that some players have stopped offering after the temporary tariff cut between the US and China,” he added.

Trade policies collide with approaching off-season for PVC

Across the country’s PVC markets, the confidence has weakened due to the lack of improvement in supply-demand dynamics. Although recent policy measures have been announced, they have offered only limited support. With the off-season approaching and continued uncertainty in export demand, upward price momentum remains under pressure. Still, prices are expected to remain largely flat, with cost support staying at the lower end.

“We hope to see some positive effects from the temporary tariff cut. Yet, prices are still weighed down by persistently weak fundamentals,” opined a source from a Chinese producer who adjusted their weekly offers down.

Meanwhile, September PVC futures on the Dalian Commodity Exchange experienced a weekly decline of CNY49/ton ($7/ton) as of May 13, justifying the bearish pricing strategy of the producer.

First hikes in local PS prices since early Feb

Reciprocal tariff cuts led to higher crude oil and spot styrene prices, setting the stage for a rebound in the country’s PS markets. While import markets have stayed quiet, a producer source reported slight increases in domestic PS prices, marking the first hike since early February, according to the ChemOrbis Price Index.

Spot styrene prices were $30/ton higher from a week earlier to stand at $900/ton CFR China, climbing back to their April levels. This rebound comes after styrene hit its lowest point since December 2020, suggesting the recent rise is more of a correction than a sustained trend—though traders remain hopeful. “Despite ongoing supply-demand weakness, we expect an upward trend in the near term,” added the producer’s source. Still, the source also noted that future PS trends will depend on downstream operating rates, which are being closely monitored for signs of recovery.