LLDPE Prices Fall to Five-Year Low, Industry Enters "Involutionary Expansion" Dilemma

In September 2025, the price of LLDPE (Linear Low-Density Polyethylene) in the East China region dropped to 7,150-7,340 RMB per ton, which is on par with the price at the end of August 2020, and has declined by over 30% compared to the historical peak in October 2021. This price level marks the industry's entry into a vicious cycle of "increased volume, decreased price" after five years of capacity expansion. Supply-demand imbalance and homogenized competition have become the main themes of the current market.

Based on historical trends,After reaching a phased peak in October 2021, LLDPE prices began a volatile downward trend. Despite a year-on-year increase of 8.84% in maintenance loss from January to September 2025, daily production has consistently remained above 40,000 tons, with the production capacity base reaching 16.84 million tons, a 68% increase compared to 2020. North China and East China, serving as resource distribution centers, have witnessed intense bidding for general-purpose materials, with frequent price stampedes. Notably, the new installations of Guangxi Petrochemical and Shandong Xin Petrochemical will be put into operation by the end of the year, and the additional production capacity within the year will continue to exert pressure, making it difficult to alleviate the "involution" trend on the supply side in the short term.

Explosive Growth of Production Capacity and Import Substitution Game

The integration of refining and chemical production accelerates homogeneous competition: New capacities from Inner Mongolia Baofeng, ExxonMobil Huizhou, Yulong Petrochemical, and others are being concentrated and released, driving the domestic market.LLDPE production capacity increased from 10.01 million tons in 2020 to 16.84 million tons in 2025, with the import dependence decreasing by 17%. The import arbitrage window has been closed for a long time, while export volumes surged by 637.83%. Companies have been forced to turn to overseas markets like Vietnam and Bangladesh for alternatives. However, the growth in exports only partially alleviates the domestic surplus pressure, with the capacity utilization rate still maintained at a high level of 80%-90%. The industry is trapped in a vicious cycle of "expansion-overcapacity-price reduction."

The dual pressure of import substitution and export breakthrough: the substitution effect of domestic materials for imported materials is significant, but the export growth rate is far lower than the capacity growth rate. Taking the East China market as an example,In September 2025, the price of LLDPE is 200 yuan/ton lower than that in the same period of 2020, while production capacity has increased by 68% during the same period. The price drop per unit of capacity exceeds 50%, highlighting the severity of overcapacity.

Image source: LLDPE

The operating rate of downstream industries is significantly lower than in previous years: The agricultural film industry is affected by the leap month of June, delaying the agricultural production schedule. Coupled with the low profitability of agricultural products, farmers are less motivated to replace greenhouse films, resulting in a year-on-year decline in the industry's operating rate.The packaging film industry has seen a temporary increase in orders due to the Mid-Autumn Festival and National Day, with prices ranging from 8% to 24%. However, as long-term orders are fulfilled by mid-month, there is a strong expectation of reduced new orders, and there is a risk of a decline in the operating rate in October. The compression of profits in end products and financial pressures have led factories to adopt a "just-in-time" procurement strategy, resulting in low willingness to replenish inventory actively.

Demand structure differentiation intensifies: demand for emerging fields such as high-end packaging and e-commerce logistics is growing, while the growth rate of demand for traditional agricultural films and packaging films is slowing down. Taking agricultural films as an example, in the northern regions...Although October has entered the peak season, the production cycle has shortened due to the drop in temperature, and the increase in demand is limited. The packaging film industry is also facing pressure from shrinking orders after the "holiday effect" fades.

From "scale competition" to "quality innovation"

In the short term,In September and October, agricultural films and packaging films are still supported by the peak season. However, demand weakens after late October, and the release of new facilities may further suppress the market. In the game between "price preservation" and "market grabbing," some enterprises choose low prices to promote transactions, but long-term reliance on structural reform is necessary. Supply-side reform needs to promote capacity optimization, eliminate outdated capacities, and encourage enterprises to transform towards high-end and differentiated products. On the demand side, innovation requires tapping into new scenarios such as e-commerce logistics and new energy packaging, and expanding export markets to regions like Southeast Asia and the Middle East.

Industry transformation direction: the future needs to break away from."Scale competition" relies on, shifting towards "quality and innovation-driven." For example, developing high value-added specialty polyethylene products to enhance product added value; optimizing supply chain efficiency and reducing transaction costs through digital tools (such as plastic B2B e-commerce); exploring circular economy models to promote the application of recycled polyethylene in response to the "dual carbon" policy orientation.

Conclusion:

The five-year cycle in the LLDPE market is a concentrated outbreak of the industry's expansionary growth and structural contradictions. Only through the dual driving forces of supply-side reform and demand innovation can the "involution" dilemma be overcome, achieving a transformation from "increased volume and decreased price" to "improved quality and efficiency." The current low prices present both a challenge and an opportunity for industry reshuffling and upgrading. Enterprises need to find a balance between maintaining prices and stabilizing the market while expanding their market share. At the same time, they should lay out a long-term strategy focused on quality and innovation to gain an advantage in the new cycle.