China PP and PE Markets Reopen Strongly as Futures Rally

China’s PP and PE markets returned from the week-long National Day holiday with stronger-than-expected momentum on Thursday, October 8. A sharp rise in Dalian futures improved market sentiment and encouraged some buyers to resume purchasing in the domestic spot market.

Trading activity, however, has not yet returned to normal following the extended holiday break. The relatively limited rise in producer inventories has also provided some support, raising expectations for a firmer market in the near term. Whether this early strength develops into a sustained recovery in spot demand remains uncertain.

Futures Rally Boosts Market Sentiment

Polyolefin futures on the Dalian Commodity Exchange recorded substantial gains on the first trading session after the holiday.

January PP futures jumped CNY669/ton ($100/ton) from the previous settlement, while January LLDPE futures advanced CNY508/ton ($76/ton).

The sharp increases marked a significant improvement from the more moderate gains seen before the holiday. Market participants reported that the futures surge encouraged some buyers to return for replenishment.

However, with only two trading sessions remaining in the week and many participants still returning from the holiday, it is too early to assess the actual scale of buying activity or its impact on spot prices.

Producer Inventories Rise Less Than Last Year

Inventory data from CNPC and Sinopec provided another positive signal for the market.

Combined PP and PE stocks at the two major producers increased by 140,000 tons during the holiday, reaching 790,000 tons on October 8, compared with 650,000 tons before the break.

While the buildup was significant, it was much smaller than the 255,000-ton increase recorded after the comparable holiday period in 2025.

The latest inventory level was also below the 845,000 tons reported after the 2025 holiday and the approximately 915,000 tons seen following the 2024 holiday.

The smaller accumulation indicates that producers are returning to the market with a more manageable stock position than in previous years. This could reduce immediate selling pressure if downstream buyers continue replenishing.

At the same time, inventories remain elevated compared with pre-holiday levels, making the speed of stock reduction an important indicator of underlying demand.

Oil Rebound Adds to Positive Sentiment

Crude oil markets also contributed to the more positive tone. December Brent futures closed slightly lower on Wednesday, October 7, but recovered sharply during trading on Thursday.

The rebound in oil added further support to already stronger polyolefin futures. However, crude prices have remained highly volatile in recent weeks, making it difficult to determine whether the latest increase will provide lasting cost support.

Before the holiday, Asian ethylene and propylene prices had also moved lower from their recent multi-month highs, indicating that upstream cost pressure had begun to ease.

Demand Recovery Still Needs Confirmation

Before the holiday, China’s PP and PE markets had regained upward momentum after a short correction. Tight domestic availability, restricted import supply and high production and transportation costs had supported prices.

However, the recovery had remained largely driven by supply and cost factors rather than strong downstream consumption. Weak converter margins and subdued end-user demand continued to limit purchasing activity.

Those concerns remain in place despite the strong post-holiday opening.

The futures rally and relatively modest inventory buildup have given the market an encouraging start, but the sustainability of the recovery will depend on the pace of downstream operations, actual replenishment demand and the availability of imported cargoes in the coming weeks.

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