2026 Kicks Off Strong With A 6.69% Gain: Will The Rally Continue As The Spring Festival Approaches?

Data source: JLC

In January 2026, the polyethylene market staged a strong "comeback" after a year of declines in 2025, hitting new lows. As of January 26th, the PE price index had risen by 6.69% from the low point at the end of 2025, showing a generally strong trend. With the Lunar New Year (Spring Festival) approaching, how much further can the polyethylene market rise?

First, in terms of cost: Although international oil prices rebounded in January, they still remained in a weak pattern. In February, demand continued to be subdued.Particularly around the traditional Chinese Spring Festival, oil consumption in the Asian region is expected to decline further. Relative to demand, crude oil supply remains at a high level; notably, following the oil agreement reached between the United States and Venezuela, more crude oil will be released into the market. Naturally, due to the volatility of the geopolitical landscape, there is also the possibility of short-term localized supply reductions. Furthermore, geopolitical tensions remain disruptive, with the situation in Venezuela, U.S.-Iran relations, and the Russia-Ukraine conflict potentially impacting short-term oil price trends at any time. Overall, influenced by economic and geopolitical uncertainties, international crude oil prices in February may exhibit repeated fluctuations. It is expected that support from the cost side will remain in the short term.

Secondly, regarding supply and demand: The characteristics of the off-season for demand are becoming more prominent. February falls around the Spring Festival holiday, and downstream enterprises mainly suspend or reduce production, resulting in lower purchasing intentions. Although some demand for agricultural film may gradually start in late February, the start time is late in the month and the scale is relatively limited. Demand is expected to reach its lowest level of the year, leading to price adjustments and consolidation. It is recommended to pay close attention to the resumption of work and production after the holiday. On the supply side, there are not many planned maintenance shutdowns in February, and some units are scheduled to restart after completing previous maintenance. Coupled with a decrease in destocking efforts, supply-side pressure is increasing.

Latest news: After the positive macroeconomic news was fully digested, market sentiment turned cautious and bearish. Market participants lacked confidence in the future market and generally adopted an aggressive destocking strategy before the holiday. However, the current geopolitical situation is highly uncertain, and tensions in Iran are escalating, providing ample speculative opportunities.

Overall, domestic polyethylene prices in China are expected to mainly show a weak consolidation pattern in February. Influenced by the Spring Festival holiday, trading activity will gradually slow down as the holiday approaches, with overall seasonal characteristics being prominent.