China PE Prices Near Earlier War-Driven Highs as Feedstock Costs and Futures Rally

China’s domestic PE market has strengthened significantly in recent weeks, pushing LDPE and LLDPE film prices to within around $15/ton of their previous war-driven peaks. Higher crude oil and ethylene costs, combined with a strong rise in Dalian LLDPE futures, have given sellers greater confidence to raise offers.

The weekly average prices of local LDPE and LLDPE film are now only about $15/ton below their respective highs reached in mid-May and early April. HDPE film remains further away, at approximately $80/ton below its mid-May peak, despite recording fresh gains this week.

LDPE and LLDPE Approach Previous Highs

LDPE film prices have continued their upward movement for a fifth consecutive week, while LLDPE film returned to positive territory after a short correction. HDPE film also resumed its rise following a week of stability.

The latest increases have recovered most of the losses recorded after the first war-related price rally earlier this year. LDPE and LLDPE are now particularly close to those previous highs, highlighting the strength of the recent domestic market recovery.

A major factor behind the latest momentum has been the surge in futures. As of September 4, January LLDPE futures on the Dalian Commodity Exchange had increased by CNY 699/ton ($104/ton) from the previous week. The sharp futures rally has strengthened market sentiment and encouraged sellers to hold firm on their offers.

Crude Above $95 and Higher Ethylene Strengthen Cost Support

The PE market’s recent gains have coincided with renewed strength across energy and feedstock markets. Crude oil moved above $95/bbl in early September as renewed US-Iran military clashes increased concerns about Middle Eastern supply and shipping through the Strait of Hormuz.

Brent crude averaged approximately $94/bbl during the first four trading sessions of the week beginning August 31. This was around $4.6/bbl higher than the previous week’s average of approximately $89.5/bbl.

Ethylene, PE’s immediate feedstock, has also recorded a sharp increase. Spot ethylene prices climbed by $80/ton on the week to $1,130/ton CFR China, bringing them close to a four-month high.

The combination of higher crude, stronger ethylene values and the rally in Dalian futures has increased production-cost pressure and strengthened sellers’ resistance to offering discounts, even though demand remains relatively weak.

Seasonal Demand Fails to Match the Price Rally

Despite PE prices moving close to their earlier war-driven highs, downstream demand has not shown a similar recovery. Market participants continue to describe overall PE consumption as subdued, with the traditional “Golden September” season yet to deliver a broad improvement.

A trader said overall PE demand remains muted and is weaker than PP demand, with no meaningful peak-season recovery seen so far.

Another trader noted that converters are finding it difficult to absorb the rapid price increases. However, relatively low inventories could encourage buyers to return to the market for essential replenishment.

An end-product manufacturer also said seasonal demand has fallen short of earlier expectations, although consumption has improved slightly compared with August.

Some improvement has been reported in northern China, where agricultural film producers have started receiving more orders. This has encouraged higher operating rates and provided a clearer indication of seasonal demand recovery. Nevertheless, the improvement remains uneven, while weaker purchasing power and uncertainty in global markets continue to limit overall downstream consumption.

Producer Inventories Rise as Supply Gradually Improves

Supply conditions have become increasingly mixed. Maintenance shutdowns and reduced operating rates at some plants have restricted availability in parts of the domestic market, while several facilities are preparing to restart. These restarts are expected to gradually increase overall production.

The changing supply situation is also visible in producer inventories. Combined PP and PE inventories at China’s two major producers increased by 95,000 tons from the previous week to 690,000 tons as of September 4, representing a rise of nearly 16%.

A market participant said supply is gradually increasing as operating rates recover with the beginning of Golden September, while downstream demand remains below normal seasonal expectations.

Overall, China’s LDPE and LLDPE film markets are approaching their earlier war-driven peaks, supported strongly by feedstock costs and futures, while subdued demand and rising inventories remain key constraints on further gains.

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