China’s local PP, PE prices hold largely flat post-holiday amid slow restart; futures rally in focus

China’s domestic PP and PE markets have remained largely stable following the Lunar New Year holiday, as improving cost support contrasts with still-soft supply-demand fundamentals. Despite strong gains in futures markets, spot prices have seen limited movement, with sellers adopting a cautious approach while waiting for clearer signs of demand recovery. Trading activity remains subdued, reflecting the gradual restart of downstream operations.

Futures rally and higher costs support sentiment

The reopening of the Dalian Commodity Exchange after the holiday brought firm gains in polyolefin futures. LLDPE futures rose by CNY154/ton ($22/ton), while PP futures increased by CNY183/ton ($27/ton), providing psychological support to the market. Rising upstream costs have also strengthened sentiment, as Brent crude climbed above $70/bbl to its highest level since July 2025. At the same time, propylene and ethylene prices in China edged up by $10/ton, reinforcing cost pressure on producers.

Demand recovery remains slow after holiday break

Demand conditions remain weak, as many downstream plants have not yet fully resumed production. Factories are gradually restarting, but operating rates remain low, limiting buying interest and keeping overall trading volumes subdued. Market participants reported cautious sentiment, with buyers largely adopting a wait-and-see approach until demand improves and production normalizes in early March.

Inventory surge highlights supply pressure

Polyolefin inventories rose sharply during the holiday due to continued upstream production and paused downstream consumption. Total PP and PE inventories reached 940,000 tons on February 24, more than doubling during the holiday period. However, inventories declined by 65,000 tons the following day, indicating early signs of restocking. This suggests supply pressure may gradually ease as downstream operations resume and demand recovers.

Outlook remains cautiously stable

Overall, China’s PP and PE markets remain balanced between improving cost support and slow demand recovery. While futures gains and rising feedstock costs have strengthened sentiment, the pace of price increases will depend on the speed of downstream restarts and continued inventory reduction in the coming weeks.

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