China PE Market Shows Mixed Trend as Crude Prices Weaken

China’s polyethylene (PE) market has opened the week on a mixed note, with domestic prices seeing some downward revisions while most import offers remain stable or slightly higher. However, selected Middle Eastern grades, particularly HDPE and LLDPE, have faced small price reductions, reflecting the different pressures influencing the market.

Market sentiment is being shaped by several competing factors. Improving buying activity ahead of China’s upcoming long holidays and relatively tight supply are providing support, while falling crude oil and naphtha prices are weighing on costs. At the same time, firm ethylene prices at multi-month highs are offering some upstream support.

Falling Crude Weighs on Market Sentiment

Domestic PE prices have come under pressure at the beginning of the week, while import offers have generally held firm. A trader said most overseas suppliers have not yet adjusted their prices in line with the softer domestic market.

However, a buyer reported lower Middle Eastern offers for HDPE and LLDPE, while LDPE prices were mostly unchanged. Two traders handling Saudi Arabian material also reported slight reductions in offers for three major film grades from the region.

The divergence comes as support from upstream energy costs has weakened following the recent decline in crude oil prices. Spot ethylene, however, has remained comparatively firm and continues to trade near multi-month highs due to limited availability. This has provided some support to PE producers despite weaker crude values.

Developments surrounding peace talks related to the Middle East conflict remain closely watched by polymer market participants, as changes in the situation can quickly influence crude oil prices and subsequently affect naphtha and other feedstock costs.

Brent crude futures had fallen below the $100/bbl level at the time of writing.

Holiday Demand and Tight Supply Provide Support

China’s approaching Mid-Autumn Festival and National Day holidays are beginning to provide some support to PE demand. A trader said downstream orders are gradually improving, with food packaging manufacturers potentially adding to buying activity ahead of the holidays.

Low inventories could also encourage buyers to replenish stocks. A producer source noted that buyers may need to restock soon because their current inventories remain low.

Supply conditions are another factor limiting the downside. September maintenance shutdowns and restricted import availability have kept PE supply relatively tight. Producers have also continued to control operating rates in an effort to avoid further losses caused by high production costs.

Nevertheless, elevated production costs are discouraging buyers from making aggressive inventory purchases, while overall downstream demand remains weaker than normally expected during the peak season. In addition, several PE units are scheduled to restart, which is expected to gradually increase availability.

Market Outlook Remains Balanced Between Opposing Forces

China’s PE market is currently facing competing influences. Tight supply, low inventories and improving pre-holiday demand are helping to support prices, while weaker crude and naphtha values, high production costs and upcoming plant restarts are limiting the potential for further gains.

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