Demand Cools! Recycled PE Expected to Remain in a Weak and Narrow Range

I. Market Overview

In late June 2026, China’s recycled PE market saw a standoff between strong cost support and weakening end-use demand, with the spot transaction range continuing to narrow and only scattered need-based deals taking place. According to Longzhong Information’s industrial chain monitoring data for late June, upstream waste PE recycling supply showed regional divergence, while the procurement cost of scrap materials rose rigidly. Downstream agricultural film, packaging, and hollow products all entered the traditional summer off-season, with bulk purchase orders coming to a complete standstill. During the same period, domestic virgin PE futures fluctuated weakly within a narrow range, offering no clear upward guidance. With recycled PE lacking bullish drivers, the short-term weak and range-bound trend is unlikely to change.

II. Supply Side: No Increase in Total Recycled PE Volume, Pelletizing Operating Rates Remain Low

Waste recycling stage

Recycling stations in East and South China have ample inventories, with abundant circulating supply of waste agricultural film and waste packaging film, but recyclers are uniformly lowering purchase prices. In northern and inland regions, small-scale suppliers show weak willingness to trade, and there is no increase in the total nationwide circulation of waste PE scrap. Fixed costs for labor, short-haul transportation, and warehousing continue to rise, creating a rigid floor for waste PE scrap purchase prices and directly pushing up pelletizing processing costs.

Recycling granulation enterprise

Small and medium-sized recycled PE pelletizing plants across China are all operating at the break-even point. High raw material prices cannot be passed on to downstream customers, prompting companies to proactively reduce operating loads and control output. The average operating rate in the recycled PE industry remains stable at 40%. Large processing plants maintain stable production through long-term recycling channels and fixed customers, while small and medium-sized workshops all operate on a buy-to-produce basis and do not stockpile finished PE pellets.

In terms of inventory, finished PE product inventories at both pelletizing plants and traders are in the neutral range, with neither conditions for large-scale destocking nor large-scale restocking, and therefore unable to drive significant price fluctuations.

3. Demand side: the suspension of agricultural film production has significantly dragged down demand, with purchases limited to only essential needs.