SupplyFriday, 5 June 2026·India
China PE Market Extends Downtrend as Supply Increases and Demand Remains Weak
China's polyethylene (PE) market continued to weaken in early June, with both domestic and imported prices moving further away from the multi-year highs recorded earlier this year. While polypropylene (PP) has found some support from tighter supply conditions, PE continues to face pressure from comfortable availability, weak downstream demand, and softer feedstock costs.
Market participants noted that the recent correction reflects a shift in market fundamentals. Additional production capacity is expected to return in the coming weeks, while demand from key consuming sectors remains sluggish, keeping buyers cautious.
PE Prices Continue to Retreat
Recent market corrections from peak levels are as follows:
Import Market
• LDPE Film: Down 3% from May peak
• HDPE Film: Down 4% from May peak
• LLDPE Film: Down 6% from April peak
Domestic Market
• LDPE Film: Down 9% from May peak
• HDPE Film: Down 6% from May peak
• LLDPE Film: Down 8% from April peak
Although prices have eased, most grades remain above levels seen before the strong rally earlier this year.
Supply Outlook Turns More Comfortable
Unlike PP, where maintenance shutdowns have tightened supply, PE availability is expected to increase as several plants prepare to restart operations. At the same time, no major new shutdowns are currently planned.
Demand remains a major concern. Agricultural film producers are entering the seasonal off-season, resulting in lower operating rates, while packaging-related demand has yet to show meaningful improvement. Most buyers continue purchasing only for immediate production needs rather than building inventory.
Market sources also reported rising inventories in several regions, adding further pressure on local prices.
Inventory Decline Fails to Boost Confidence
Combined polyolefin inventories held by China's two largest producers fell by approximately 70,000 tons during the week, reaching around 740,000 tons.
However, market participants believe the decline was mainly driven by production outages and maintenance activities rather than stronger demand. As a result, the inventory reduction failed to improve overall market sentiment.
Even gains in Dalian futures earlier in the week were unable to generate sustained buying interest, as downstream sectors remain cautious.
Feedstock Weakness Adds Pressure
The upstream market continues to move lower. Ethylene prices in China have declined for eight consecutive weeks and are now around 37% below the levels seen in early April.
Lower feedstock costs have weakened cost support for PE producers and reinforced expectations of further softness in the market.
Domestic materials remain more competitive than imported cargoes, limiting buying interest for overseas suppliers. Many exporters from the Middle East and Northeast Asia are increasingly focusing on Southeast Asian markets where demand and pricing opportunities appear more attractive.
Market Outlook
China's PE market remains under pressure from growing supply, weak downstream consumption, and falling feedstock costs. Unless demand improves significantly, market participants expect PE prices to remain soft through the coming weeks, with sentiment likely to stay cautious heading into July.
Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.
Market participants noted that the recent correction reflects a shift in market fundamentals. Additional production capacity is expected to return in the coming weeks, while demand from key consuming sectors remains sluggish, keeping buyers cautious.
PE Prices Continue to Retreat
Recent market corrections from peak levels are as follows:
Import Market
• LDPE Film: Down 3% from May peak
• HDPE Film: Down 4% from May peak
• LLDPE Film: Down 6% from April peak
Domestic Market
• LDPE Film: Down 9% from May peak
• HDPE Film: Down 6% from May peak
• LLDPE Film: Down 8% from April peak
Although prices have eased, most grades remain above levels seen before the strong rally earlier this year.
Supply Outlook Turns More Comfortable
Unlike PP, where maintenance shutdowns have tightened supply, PE availability is expected to increase as several plants prepare to restart operations. At the same time, no major new shutdowns are currently planned.
Demand remains a major concern. Agricultural film producers are entering the seasonal off-season, resulting in lower operating rates, while packaging-related demand has yet to show meaningful improvement. Most buyers continue purchasing only for immediate production needs rather than building inventory.
Market sources also reported rising inventories in several regions, adding further pressure on local prices.
Inventory Decline Fails to Boost Confidence
Combined polyolefin inventories held by China's two largest producers fell by approximately 70,000 tons during the week, reaching around 740,000 tons.
However, market participants believe the decline was mainly driven by production outages and maintenance activities rather than stronger demand. As a result, the inventory reduction failed to improve overall market sentiment.
Even gains in Dalian futures earlier in the week were unable to generate sustained buying interest, as downstream sectors remain cautious.
Feedstock Weakness Adds Pressure
The upstream market continues to move lower. Ethylene prices in China have declined for eight consecutive weeks and are now around 37% below the levels seen in early April.
Lower feedstock costs have weakened cost support for PE producers and reinforced expectations of further softness in the market.
Domestic materials remain more competitive than imported cargoes, limiting buying interest for overseas suppliers. Many exporters from the Middle East and Northeast Asia are increasingly focusing on Southeast Asian markets where demand and pricing opportunities appear more attractive.
Market Outlook
China's PE market remains under pressure from growing supply, weak downstream consumption, and falling feedstock costs. Unless demand improves significantly, market participants expect PE prices to remain soft through the coming weeks, with sentiment likely to stay cautious heading into July.
Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.