China PP and PE Markets Strengthen as September Opens with Oil and Futures Gains

China’s PP and PE markets have begun September on a stronger note, supported by rising crude oil prices and significant gains in Dalian futures following a relatively subdued end to August. Domestic prices have moved upward, while import and export indications have also strengthened.

The firmer market sentiment comes as the traditional peak season starts to provide some support to demand, particularly in the PE sector. However, market participants remain cautious about how long the rally can continue, as supply is expected to increase in the coming months. Recent price gains have been driven mainly by higher costs and futures rather than a major improvement in underlying fundamentals.

Dalian Futures Rally Supports Market Sentiment

A sharp rise in Dalian futures at the beginning of the week has been a major factor behind the renewed bullish sentiment.

January LLDPE futures on the Dalian Commodity Exchange increased by CNY 272/ton ($41/ton) on August 31 and rose another CNY 189/ton ($28/ton) on September 1. January PP futures gained CNY 276/ton ($41/ton) on Monday, followed by a further CNY 169/ton ($25/ton) increase on Tuesday.

The futures gains coincided with a strong rise in crude oil prices. November Brent crude climbed $2.39/bbl to $90.49/bbl on Monday, adding further cost support to the polymer markets.

Supported by these developments, domestic PP and PE prices increased, while import and export indications also moved higher.

Domestic PP homo-PP raffia and injection prices rose by around CNY 150/ton ($22/ton) from the previous week. PE film grades recorded more varied increases of approximately CNY 100–400/ton ($15–60/ton), depending on the grade.

This stronger momentum represents a clear change from late August, when buyers had become increasingly hesitant to follow higher prices after the earlier rally.

PE Demand Shows Signs of Seasonal Recovery

Demand conditions have become somewhat more supportive as September gets underway. Although downstream demand remains relatively weak in absolute terms, market participants have reported an improvement from August as the traditional peak season begins.

The most noticeable recovery has been seen in agricultural films in northern China, where manufacturers are gradually receiving more orders and increasing operating rates.

One Chinese trader said agricultural film demand in northern China is steadily improving, with stronger orders encouraging manufacturers to raise operating rates and supporting raw-material demand. However, he expects PE prices to fluctuate in the near term as improving seasonal demand competes with expectations of higher production.

Another trader noted that the seasonal recovery, which was largely absent in August, is now becoming visible but has not yet developed into a broad-based surge in demand. Buyers are expected to remain selective, particularly following the sharp price increases at the beginning of September.

PP Market Turns Firmer Despite Uneven Demand Recovery

Sentiment in the PP market has also improved, although market participants remain divided over the strength of the seasonal demand recovery.

One trader attributed the recent price increases mainly to the strong rise in futures compared with the previous week. Market supply remains tight due to low inventories and reduced operating rates, particularly in eastern China, with some producers cutting production because of weak margins.

However, downstream demand remains soft, with no clear indication yet of a strong peak-season recovery. Buyers have shown interest in offers but continue to purchase mainly according to immediate requirements, while transaction volumes remain average. Despite this, the trader expects prices to stay firm in the near term.

Another PP trader also linked the price increases to the futures rally and said overall market sentiment had strengthened. Supply remains tight for certain grades, including raffia, fiber and PPBC, while the overall PP operating rate is around 71%.

Downstream operating rates have also improved somewhat as the market moves out of the off-season, although buyers continue to purchase largely on a need-based basis. The trader expects the market to remain firm, supported by higher costs and strong futures.

Overall, market feedback indicates that the seasonal recovery is becoming more evident, but it has not yet resulted in a broad acceleration in buying activity. At the same time, several producers are preparing to restart operations, while some other facilities have planned maintenance ahead. This could lead to higher overall production in the coming period. New PP capacity expected later this year will also remain an important factor for the market outlook.

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