Supply and Demand Margins Expected to Weaken, Polyethylene Prices Likely to Fall

Summary

During this cycle, the polyethylene market prices fluctuated and weakened, with a decline of around 80 RMB/ton. This week coincides with the end of the month, as production enterprises gradually stop sales and settle accounts, there is an expectation of decreased spot goods in the market, and the inventory in social sample warehouses continues to fall, providing some support. However, supply has been at a high level for a long time, and there is an expectation of weakened supply-demand margins next month. The market sentiment is bearish, with active low-price pre-sales of long-term resources, which suppresses the market price rebound. Polyethylene prices are showing a trend of fluctuating weakness. As of November 27, the mainstream price in North China is between 6720-6880 RMB/ton.

Recent focus points in the polyethylene market:

This week, polyethylene production reached 684,900 tons, an increase of 2.19% compared to last week. Among them, the production in East China saw a significant increase of 6.80%, while Northeast China experienced a notable decrease of 2.73%.

This week, the sample inventory of polyethylene production enterprises in China is 454,000 tons, a decrease of 9.80% compared to the previous week; the social sample warehouse inventory is 471,100 tons, a decrease of 3.05%.

This week's overall operating rate of polyethylene downstream industries is 44.30%, compared to last week's -0.39%.

This week, polyethylene profits were adjusted, with oil-based profits increasing by 14.29% and coal-based profits decreasing by 79.71% (with a relatively small base).

This week, the USD prices in the Chinese market have decreased by 5-23 USD/ton, and the market outlook remains weak, with importers being cautious in taking over.

1. The market sentiment is bearish, and the polyethylene market is experiencing fluctuations and declines.

Prediction: At the beginning of next week, the spot market is expected to gradually recover to adequate levels, with fewer planned maintenance shutdowns, and supply remains at a high level without signs of easing pressure. Downstream factory operating rates are expected to fluctuate slightly, with just-in-time restocking but resistance to price increases, making demand support unstable. There is an expectation of weakening supply and demand margins in the future, with traders actively pre-selling forward resources to alleviate future pressure. Therefore, in the short term, the polyethylene market is expected to see weakening supply and demand margins next week, making prices more likely to fall than rise, with a weak trend anticipated. The mainstream price in North China is expected to be between 6,700-6,900 yuan/ton.

This week, the plastic basis continues to show a strong trend. The main plastic futures have been significantly influenced by macroeconomic news, leading to bearish sentiment and recent new lows. However, downstream factory operating rates remain high, with demand still acceptable, resulting in replenishment at lower prices. The decline in spot prices is smaller than that of futures, leading to a strengthening of the basis.

Figure 1: Polyethylene Basis Price Trend Chart for 2025 (Unit: RMB/Ton)

Data source: Longzhong Information

This week, domestic polyethylene production has increased, with a rise of 2.16%. In terms of raw material sources, the production of polyethylene from ethylene remains stable, while the production of polyethylene from coal has seen a significant increase of 2.63%. Recently, the planned start-up of facilities has increased, and supply is returning as expected.

Table 1 Weekly Supply and Demand Balance of Domestic Polyethylene

Unit: 10,000 tons

Data period: Last Thursday to this Wednesday

Seasonal inventory de-stocking has certain support.

Prediction: Next week, the sample inventory of polyethylene production enterprises in China is expected to be around 480,000 tons, with inventory expected to shift from a decline to an increase. The main reasons are the end of the month and the beginning of the month, when some production enterprises will halt sales for settlement, and there is a strong intention to maintain prices, leading to a slowdown in order placements. Additionally, there is an expectation of a decline in the operating rate of downstream factories, which may slightly weaken demand, causing the downward transmission of inventory to slow down. Therefore, the inventory of production enterprises is expected to accumulate slightly.

Looking at the next cycle of social sample warehouse inventory, polyethylene prices are at a relatively low level. Although there is no clear directional guidance in the short term, bearish factors are limited. The market is expected to mainly experience weak fluctuations, and inventory levels are expected to slightly decrease.

This week's sample inventory of polyethylene production enterprises in China is 454,000 tons, down 49,300 tons from the previous period, a decrease of 9.80% compared to the previous period, with the inventory trend continuing to decline. The main reason is that the downstream operating rate has continuously maintained a high level, with demand remaining reasonable, and continuous replenishment at lower levels, facilitating the downward transfer of inventory. Additionally, as the end of the month approaches, production enterprises assess their monthly planned volume, accelerating the downward transfer of inventory, thus leading to a decline in production enterprises' inventory.

Figure 2 Inventory Trend Chart of Polyethylene Production Enterprises from 2023 to 2025 (Unit: 10,000 tons)

Data source: Longzhong Information

As of November 21, 2025, the inventory of polyethylene in social sample warehouses was 471,100 tons, down by 14,800 tons from the previous period, a month-on-month decrease of 3.05%, and a year-on-year increase of 1.15%. The inventory of China's polyethylene import warehouses decreased by 3.57% month-on-month, and was 10.51% lower year-on-year. The HDPE inventory in social sample warehouses decreased by 3.60% month-on-month, and was 47.11% lower year-on-year; the LLDPE inventory in social sample warehouses decreased by 2.64% month-on-month, and was 76.00% higher year-on-year; the LDPE inventory in social sample warehouses decreased by 2.94% month-on-month, and was 128.36% higher year-on-year. After prices declined, terminal profits improved slightly, but the market sentiment remained cautious, leading to continued on-demand purchasing, resulting in a decrease in inventory compared to the previous period.

Figure 3: Trend Chart of Polyethylene Social Warehouse Inventory from 2023 to 2025 (Unit: 10,000 tons)

Data source: Longzhong Information

During this period (November 21 to November 27), the production of polyethylene was 684,900 tons, an increase of 2.19% compared to last week. The production in the East China region saw a significant increase, with a growth rate of 6.80%, while the Northeast region experienced the largest decline, with a decrease of 2.73%. There are not many planned maintenance shutdowns in December, but there are still a considerable number of ongoing maintenance shutdowns. The loss in production due to maintenance is expected to be 371,100 tons, a decrease of 2.47% month-on-month and 4.04% year-on-year.

Figure 4: Polyethylene Capacity Utilization Rate Trend Chart for 2023-2025

Source of data: Longzhong Information

Table 2 Weekly Polyethylene Production by Region in the Country

Unit: 10,000 tons

This week, the price of USD in the Chinese market has dropped by 5-23 USD/ton. As of now, the price of LDPE is 920-940 USD/ton, and the price of LLDPE is 770-820 USD/ton.

During the week, the US dollar market showed a weak downward trend, with future expectations remaining bearish. Importers were cautious in taking orders, but there were transactions at low offer prices. Due to factors such as delayed shipping schedules, the market expects an increase in import volume for the first quarter. Overall, it is expected that the US dollar price will mainly fluctuate and consolidate.

Table 3 Comparison of Price Differences between Imported Polyethylene and Domestic Resources (RMB/Ton, USD/Ton)

Table 4 Details of Polyethylene Import Shipping Schedule

3. The demand for agricultural film is divided between the north and south, while the demand for packaging film remains.

Forecast: Next week, the downstream operating rate is expected to rise slightly, with an increase of about 0.06%. By product category, the operating rate in the agricultural film and hollow industry is expected to decline by around 1%, while the operating rate in the packaging film industry is expected to rise by 1%. The operating rates in the pipe, wire drawing, and injection molding industries are expected to remain stable with minor fluctuations. Demand for agricultural film shows regional differentiation, while there is still existing demand for packaging film.

1. Polyethylene trades price for volume, profit adjustment.

Explanation: Translate the above content into English and output the translation directly without any explanation.

Price unit: yuan/ton

Price cycle: Weekly average price (from last Friday to this Thursday)

Product Pricing Area: Mainstream Prices in the Domestic Market

From the upstream and downstream transmission perspective, the support from the cost side has weakened significantly. The polyethylene capacity utilization rate has risen, while the operating rate downstream has slightly declined. The market sentiment remains bearish, with a focus on actively selling, leading to price drops and inventory reduction. HDPE prices remain stable, LDPE prices have decreased by 0.45%, and LLDPE prices have decreased by 0.53%. Polyethylene profit adjustments show oil-based profits rising by 14.29%, while coal-based profits have dropped by 79.71% (with a relatively small base).

Figure 5 Profit Trend of Different Raw Materials for Polyethylene in 2024-2025 (Yuan/Ton)

Data source: Longzhong Information

The demand for greenhouse films has shown signs of slowing down, and the purchasing intensity for packaging films is decreasing by the end of the month.

This week, the overall operating rate of downstream industries for polyethylene is 44.30%, a decrease of 0.39% compared to last week, with an expected increase of 0.06% next week.

In the agricultural film industry, the operating rate is 49.04%, a decrease of 0.88% compared to last week. Regarding greenhouse films, although some companies are still nearing the end of their peak production season, terminal demand has already shown signs of slowing down, resulting in a slight decline in the operating rate compared to earlier periods. The mulch film market continues its off-season demand, with only a few companies in the Northwest and Southwest regions maintaining some production based on tender orders. Most other mulch film companies are still primarily shut down or operating at low capacity due to the scarcity of orders.

In the PE packaging film industry, the operating rate is at 50.70%, a decrease of 0.22% compared to the previous period. Approaching the end of the month, purchasing power in most downstream sectors is limited, consumption is slowing down, and product companies are completing orders gradually with fewer new orders coming in. Although there are some scattered orders for small-scale supplements, large-scale companies are seeing significant reductions in long-term orders. The average operating rate of PE packaging film companies is weakening, and the load has slightly decreased compared to the previous period.

Figure 6: Operating Rate Trend Chart of Polyethylene Downstream from 2023 to 2025

Data Source: Longzhong Information

Figure 7: Operating Rate Trend Chart for LLDPE/LDPE Downstream from 2023 to 2025

Data source: Longzhong Information

Figure 8: Operating Rate Trend Chart for HDPE Downstream from 2023 to 2025

Data source: Longzhong Information

The instability of the geopolitical situation has increased, and there is room for international oil prices to rise.

Prediction: Russia's negotiating position is relatively strong, leading to a stalemate in Russia-Ukraine talks. The instability in the geopolitical situation will raise the risk valuation for oil prices, providing short-term support. It is expected that international oil prices will have room for growth next week, with WTI potentially trading in the range of $58-62 per barrel and Brent in the range of $63-66 per barrel. As geopolitical instability increases, there is room for international oil prices to rise.

This week, the cost difference between polyethylene produced from oil and coal has narrowed by 32 yuan/ton, while the profit difference has expanded by 102 yuan/ton. Profits mainly declined, with only low-pressure injection molding profits increasing by 46 yuan/ton. (Point value comparison)

Figure 9 Cost Trend of Different Raw Material Sources for Polyethylene in 2024-2025 (Yuan/Ton)

Data Source: Longzhong Information

Table 5: Analysis of Cost and Profit Margin in the Domestic Polyethylene Market

V. With the expectation of weakening supply and demand margins, polyethylene prices are more likely to fall than rise.

Recent key focus: downstream factories' continued efforts in inventory replenishment, inventory destocking intensity, release of favorable policies, changes in the supply side, and changes in the cost side.

Table 6 Forecast of Domestic Polyethylene Market Supply and Demand Balance

Unit: 10,000 tons

Supply: In the next 1-3 weeks, domestic polyethylene production is expected to remain at a high level. The low point is projected at 675,500 tons in the second week, while the high point is 684,000 tons in the first week. There are limited new planned maintenance facilities, and supply pressure is expected to be difficult to alleviate.

Demand: Next week, the downstream operating rate is expected to slightly increase, with a rise of about 0.06%. In terms of specific categories, the operating rate for agricultural films and hollow industries is expected to decrease by about 1%, the packaging film industry operating rate is expected to increase by 1%, and the operating rates for pipe, wire drawing, and injection molding industries are expected to remain relatively stable with minor fluctuations. Agricultural film demand is divided between the north and south, while the demand for packaging film remains strong.

Agricultural film: The average operating rate of agricultural film enterprises is expected to remain stable. The demand for greenhouse film is gradually declining in the northern market, while it shows slight fluctuations supported by local orders in the southern region. Mulch film is still in the traditional off-season, with only a few enterprises having temporary production plans. The overall operating rate of the agricultural film industry is expected to decrease slightly.

PE Packaging Film: The average operating rate of sample enterprises for PE packaging film is expected to drop by 1%. Overall, differentiation in various fields is weakening. At the beginning of the month, most terminal enterprises are purchasing moderately as orders are consumed, and the transaction atmosphere is improving temporarily. In sectors like daily chemical packaging and food packaging, although there is no consumption stimulus, overall order-taking is relatively continuous with a small follow-up of new orders. Transactions in industrial packaging are mostly negotiated based on actual demand, with just-in-time needs still present, and enterprises are mainly operating to fulfill orders, maintaining stable operation of the average operating rate.

Cost aspect:

Crude Oil: Russia has taken a relatively tough stance in negotiations, and the Russia-Ukraine talks are currently at a standstill. The instability of the geopolitical situation will increase the risk valuation of oil prices, providing short-term support for prices. It is expected that international oil prices will have room to rise next week, with WTI likely trading in the range of $58-62 per barrel and Brent in the range of $63-66 per barrel. The increased instability in the geopolitical situation allows for the potential rise in international oil prices.

Ethylene: The operating load of certain external ethylene units in the East China region has increased, combined with the continued circulation of low-priced resources from South China to the East China region, which may slightly increase supply-side pressure in the market. The average transaction price in the East China region is expected to be around 6000-6300 RMB/ton. The dollar market remains in a state of supply-demand game. It is expected that the ethylene market may weaken in the next cycle.

Figure 10 Comparison of Quarterly Price Range of Polyethylene in 2025 (RMB/ton, 10,000 tons)

Data source: Longzhong Information

Conclusion (Short Term): At the beginning of next week, the spot market is expected to gradually become sufficiently supplied. There are fewer planned maintenance shutdowns, and the supply remains at a relatively high level, with no signs of easing supply pressure. The operating rate of downstream factories is expected to fluctuate slightly, with just-in-time restocking but resistance to price increases. The demand-side support is unstable. The future supply-demand margin is expected to weaken, and industry players are actively pre-selling future resources to alleviate future pressure. Therefore, in the short term, the polyethylene market is expected to see a weakening supply-demand margin next week, with prices likely to fall rather than rise. The market trend is expected to be weak, with the mainstream price for linear low-density polyethylene in North China ranging from 6,700 to 6,900 yuan/ton.

Conclusion (Medium to Long Term): In December, Sinopec Quanzhou's HDPE is scheduled for shutdown and major maintenance, while Hainan Refining's two lines and Shanghai Petrochemical's LDPE3 are planned for shutdown and minor maintenance, resulting in a high loss of production. However, the new production facilities continue to ramp up, maintaining supply pressure. Downstream demand begins to decline, and the pre-stockpiling for the Spring Festival is expected to not yet commence, weakening support from the demand side. Therefore, from a medium to long-term perspective, the marginal supply and demand in the polyethylene market in December remains weak, with expected trends leaning towards weakness.

Risk Warning:

Upside risks: 1. Downstream factories continue to replenish inventory effectively. 2. Social sample warehouse inventory continues to decrease. 3. Unexpected positive news boosts sentiment. 4. Temporary shutdown of facilities significantly increases. 5. Support from the cost side continues to strengthen.

Downside risks: 1. Weakened replenishment efforts from downstream factories. 2. Accumulation of inventory in social sample warehouses. 3. No unexpected positive stimuli. 4. Few temporary production halts. 5. Loosening support on the cost side.