Operating Rate Rebound Drives Supply Increase, Polyethylene Market Supply and Demand Game Intensifies

Data source: Jinshidian

The recent maintenance volume of polyethylene units has remained low. Apart from units that have been shut down long-term, only Zhongyuan Petrochemical26 /Year), Lianyungang Petrochemical ( 40 /Year), Yangzi Petrochemical ( 7 /Year), Sinochem Quanzhou ( 40 /Year), Lanzhou Petrochemical (6 / A small number of units are undergoing shutdown maintenance. From the perspective of existing unit maintenance plans, although the national PE maintenance capacity in February reached 2.545 million tons, it was mainly due to the continued shutdown of previously maintained units, with limited new maintenance plans, further reducing the uncertainty on the supply side. Against this backdrop, the operating rate of domestic PE units has steadily rebounded to 86.34%, and the overall supply scale remains high.

Data source: Jin Sight

By variety,1Yue Shan Dong Yu Long30 / 2#LDPE/EVAThe new equipment was successfully put into operation and achieved mass production, directly drivingLDPEIncreased short-term supply. LLDPE、HDPEConsidering that other varieties are not facing new production capacity pressure and there are fewer plant maintenance shutdowns, the overall polyethylene operating rate is expected to remain high, ensuring a stable supply. However, short-term demand will gradually enter a phase of seasonal weakening. With the Spring Festival holiday approaching. Downstream enterprises have already begun their holiday break this week, and most factories will enter a shutdown state next week. Support from the demand side will continue to decline, and pressure on the supply side may gradually become prominent.

From a quarterly perspective, the market supply and demand pattern is expected to improve in the second quarter: on the one hand, the number of polyethylene plant maintenance shutdowns is expected to increase significantly, potentially leading to a short-term localized contraction in domestic PE supply; on the other hand, the demand side will enter a seasonal recovery cycle in the second quarter, and the rebound in terminal operating rates is expected to drive demand growth. Supported by the supply-demand mismatch of "supply contraction + demand recovery," polyethylene prices may receive strong support in the second quarter.

In the long run, China's polyethylene (PE) production capacity expansion is expected to significantly accelerate in 2026: new capacity is projected to reach 7.26 million tons for the year, bringing the total capacity to over 46 million tons. In terms of timing, the second half of the year will see a concentrated release of new capacity; structurally, the new capacity will primarily consist of full-density units and HDPE. As these new units are successively put into operation, domestic PE supply will substantially increase, with supply pressure expected to peak in the fourth quarter, and the market as a whole will face significant oversupply pressure. Among these, the general-purpose materials sector, due to its higher concentration of capacity and fuller competition, will see further intensified competition, and the profit margins of relevant enterprises may face compression risks.