Polyethylene Market Dynamics Intelligence, Analysis, and Forecast

I. Market Dynamics Intelligence
(A) Price Trends
1. Futures Market: As of May 25, 2026, the closing price of the benchmark plastic futures contract was RMB 7,828.00/ton, down RMB 46.00/ton (–0.58%) from the previous trading day. Other contracts also declined: Plastic 2612 closed at RMB 7,648.00/ton (–RMB 61.00/ton, –0.79%); Plastic 2701 closed at RMB 7,614.00/ton (–RMB 66.00/ton, –0.86%), etc.
2. Spot Market: On the first trading day after the May Day holiday, spot prices rose across the board, supported by gains in the Lianchuang (Lianplast) futures market and post-holiday restocking demand. For example, the LLDPE index increased by 0.36% compared to end-April; the LDPE index rose by 0.86%; and the HDPE index gained 0.46%. However, on the following day, as the U.S. side signaled optimism regarding bilateral negotiations, concerns over oil supply disruptions eased, leading to downward pressure on crude oil prices. Concurrently, downstream sectors entered their traditional off-season, causing the upward momentum to rapidly dissipate and prices to gradually soften. As of May 20, in the East China market, domestic high-pressure film was quoted at RMB 11,150–11,480/ton—down RMB 500–600/ton from early May; linear film at RMB 8,400–8,880/ton—down RMB 20–150/ton; and low-pressure film at RMB 9,500–10,000/ton—down RMB 100–200/ton.

(B) Supply Conditions
1. Domestic Supply: Production units previously under maintenance resumed operations progressively during mid-to-late May, lifting China’s PE operating rate month-on-month to a range of 71%–78%. LLDPE and HDPE output edged up slightly month-on-month, while LDPE output declined modestly. Overall, domestic supply became gradually more ample, slowing inventory drawdown across the social supply chain. However, certain high-pressure units remained offline for maintenance, resulting in a slight tightening of LDPE supply.
2. Import Supply: Earlier constraints on global shipping capacity and geopolitical factors delayed arrivals, lending localized support to select grades. By end-April, Middle Eastern polyolefin supplies and vessel schedules continued to be constrained, rendering import quotations into the Chinese market relatively tight overall. Nevertheless, following trade-flow adjustments globally during March–April, alternative import cargoes from North America, Southeast Asia, and other regions have incrementally increased. Imports are expected to rise in May. Should geopolitical risks persist—particularly restrictions on Strait of Hormuz passage—imports will remain reliant on costlier alternative sources, limiting total volume growth.

(C) Demand Conditions
1. Traditional Demand: The spring agricultural film peak season has fully concluded; geomembrane producers’ operating rates have dropped to a low of 15%–30%. Pipe and packaging film producers maintain only baseline, just-in-time consumption levels. Downstream fabricators face weak new order inflows and strong resistance to high raw material prices, adopting strict “just-in-use” procurement strategies with zero restocking—continuing to exert negative feedback that caps upside price potential.
2. Emerging Demand: Rapidly growing demand from photovoltaic (PV), new-energy vehicle (NEV), and premium packaging sectors for high-performance polyethylene has become a market highlight. Specialized materials—including PV backsheet films, lithium-ion battery separator films, and PV piping—see steadily expanding demand. Metallocene PE and high-impact PE remain in short supply. Domestically, policy implementation of “equipment upgrading” and “trade-in programs” is boosting demand for premium PE in home appliances and automotive applications. Nonetheless, emerging-sector demand still accounts for less than 20% of total consumption—insufficient in the near term to offset broad-based weakness in traditional demand.

(D) Cost Structure
International crude oil prices remain range-bound at elevated levels, supported by Middle Eastern geopolitical tensions. This has pushed up production costs along the naphtha–ethylene route, resulting in significant losses for oil-based PE producers—providing robust floor support for spot prices. While coal-based PE producers retain modest profitability, their influence on overall pricing remains limited.

II. Analytical Assessment
(A) Short-Term Influencing Factors
1. Geopolitics: In May, geopolitical developments remain the largest source of uncertainty. Navigational risks in the Strait of Hormuz directly threaten maritime trade flows of polyethylene. Although U.S.–Iran peace talks show progress, the broader Middle East situation remains volatile, contributing to crude oil price instability—and thereby affecting market expectations regarding supply and influencing PE pricing.
2. Supply–Demand Balance: On the supply side, domestic availability is gradually increasing; although imports are expected to rise, their growth remains constrained by geopolitical factors—resulting in limited net supply change. On the demand side, traditional demand remains lackluster, while emerging demand—though growing—is still too small a share to materially shift the balance. Consequently, the short-term supply–demand relationship remains weak, exerting persistent downward pressure on prices.
3. Cost Support: Elevated crude oil prices sustain high production costs for oil-based PE, leading to producer losses and thus providing firm bottom support for spot prices—limiting downside price movement.

(B) Medium- to Long-Term Influencing Factors
1. Capacity Expansion: A wave of new PE capacity is scheduled for commissioning in the second half of 2026, pushing China’s total annual nameplate capacity beyond 45 million tons by year-end. Capacity utilization is projected to rebound above 75%, intensifying supply pressure. Over the medium to long term, a structurally looser supply–demand balance will emerge, driving the price center of gravity gradually lower.
2. Demand Structure Evolution: Rising demand from emerging sectors will accelerate industry transformation toward refinement and product differentiation, helping alleviate oversupply pressures on commodity-grade PE. However, this structural shift cannot meaningfully counterbalance the overarching trend of supply–demand easing in the near term.

III. Forecast
(A) Short Term (1–3 Months)
The polyethylene market is likely to trade with a sideways–weak bias. Cost-side support may continue to provide a floor, limiting further downside. Expected mainstream price ranges: LLDPE at RMB 8,200–9,000/ton; HDPE at RMB 9,800–10,600/ton; LDPE at RMB 11,200–12,000/ton. Trading strategy should emphasize range-bound positioning, strict position sizing, and avoidance of momentum-driven long/short chasing.

(B) Medium to Long Term (6–12 Months)
The core market dynamic will shift from “short-term supply tightness” to “l(fā)ong-term supply–demand looseness,” prompting a gradual downward drift in the price center of gravity. However, ongoing geopolitical conflict and resilient high-end demand will anchor the price floor, preventing steep or disorderly declines.