China PE Returns to March Levels as Weak Demand and Lower Costs Weigh on Market

China’s polyethylene (PE) market remained under pressure during the week ending June 19, with both domestic and import prices continuing their downward trend. Falling crude oil values, weaker ethylene markets, and declining futures prices combined with sluggish demand to push PE prices back to levels last seen in March.

Although lower producer inventories provided some temporary support, ample material availability, expectations of rising supply, and seasonally slow consumption continued to dominate market sentiment.

PE Prices Continue Multi-Week Decline

Domestic PE film markets extended losses for a fifth consecutive week, with major grades recording notable declines from the highs reached earlier this year. LDPE and HDPE film prices moved significantly lower from their May peaks, while LLDPE film also continued to retreat from April highs.

Import markets followed the same direction, with HDPE and LLDPE film prices posting another week of losses and LDPE extending its correction. As a result, both local and imported PE film prices have now fallen back to levels seen during the early phase of the Middle East conflict.

Falling Feedstock and Futures Markets Increase Pressure

The sharp drop in upstream markets became one of the main factors behind the latest correction. Crude oil prices weakened considerably as geopolitical concerns eased, reducing the cost support that had previously helped sustain polymer prices.

Ethylene markets also remained under pressure, extending a prolonged downtrend and reaching their lowest levels in several months. The continued decline has erased a large portion of the gains generated during the conflict-driven rally earlier this year.

Meanwhile, PE futures on China's Dalian Commodity Exchange posted substantial losses, further weakening market confidence and encouraging buyers to delay purchases in anticipation of lower prices.

Market participants reported that declining energy and feedstock costs continued to force sellers to revise offers downward, while competition among global suppliers intensified as export opportunities became increasingly challenging.

Supply Remains Comfortable Despite Inventory Reduction

Producer inventories offered limited support during the week as stock levels declined due to maintenance shutdowns and some pre-holiday purchasing activity.

However, market participants noted that inventories recovered quickly during the holiday period, highlighting the lack of strong underlying demand. The rapid rebound in stocks reinforced concerns that current consumption remains insufficient to absorb available supply.

At the same time, several production units are expected to resume operations in the coming weeks, raising expectations of increased supply. With no significant new maintenance shutdowns announced, many market participants anticipate a more comfortable supply situation ahead.

Demand Remains Weak

Demand conditions showed little improvement despite isolated pockets of activity. Some seasonal demand from the agricultural film sector provided limited support, but operating rates across many downstream industries remained relatively low.

Most buyers continued to adopt a cautious purchasing strategy, maintaining minimal inventories and covering only immediate requirements. Domestic material remained the preferred choice for many processors due to shorter delivery times and lower logistical risks.

Market participants also reported growing availability of imported cargoes from multiple origins. However, downstream manufacturers remained largely focused on local material, while import purchases were primarily concentrated among traders.

Bearish Sentiment Persists

As the market enters the final weeks of June, sentiment remains largely negative. Lower crude oil prices, weaker feedstock markets, declining futures, sufficient supply, and cautious buying behavior continue to weigh on PE prices.

With additional production capacity expected to return and demand showing limited signs of recovery, market participants remain cautious about the near-term outlook. Many buyers are expected to continue purchasing only essential volumes while waiting for clearer signs of market stabilization.

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