PE markets in China, SE Asia hold near multi-week highs despite softer upstream chain

PE markets in China and Southeast Asia started August at relatively firm levels, with import prices staying close to their highest points since mid-June. Suppliers largely defended recent increases, supported by selective supply tightness and still-elevated upstream costs. However, weaker crude oil and feedstock prices over the past two weeks have limited room for further hikes. As a result, sellers have adopted mixed pricing approaches, while subdued downstream demand and growing buyer resistance have kept trading activity slow.

Import prices stay firm as sellers take different approaches

Import PE prices remained resilient across China and Southeast Asia, although seller strategies increasingly diverged. Major suppliers generally maintained elevated offers or sought additional increases, pointing to restricted allocations and limited availability. Some traders, however, reduced their offers modestly to attract buyers following the recent decline in crude and feedstock values.

Although Brent crude and spot ethylene prices have recently weakened and remained volatile, they are still above levels recorded a month earlier. Brent is around 8% higher than a month ago, while CFR China and CFR Southeast Asia ethylene prices remain approximately 20% and 14% higher, respectively. This has encouraged most suppliers to protect current price levels rather than make broad reductions.

Tight supply supports selected domestic markets

Supply constraints have provided additional support to domestic PE markets in several countries. In China, local prices continued to strengthen as producer inventories remained relatively low. Buyers have also shown greater interest in domestic material because of shipping disruptions and more competitive pricing compared with imports.

Several Chinese production units are expected to restart in the coming weeks, but market participants believe supply remains tight enough to limit significant downward pressure for now.

Southeast Asian markets have also faced supply limitations, particularly in Vietnam and Malaysia. Vietnamese buyers reported restricted cargo availability and delays in securing incoming shipments. In Malaysia, production disruptions at major producers, including Petronas and Lotte Chemical, have supported local prices. However, buyers have generally purchased only small quantities after negotiating firmly.

Weak demand limits further upside

Despite firm pricing, downstream demand remains the main constraint. Chinese converters continue to purchase only according to immediate requirements as end-product orders remain weak during the seasonal slowdown.

Market participants are also uncertain whether the traditional September-October peak season will deliver a meaningful improvement in demand this year. High temperatures have additionally affected operating rates at some downstream facilities.

Southeast Asian buyers remain similarly cautious, with many considering current PE offers too high. Converters are limiting replenishment or delaying purchases in anticipation of lower prices. Even where inquiries have improved slightly, actual transaction volumes remain limited, indicating that supply tightness has yet to translate into a sustained recovery in consumption.

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