Polyethylene Expected to Stabilize or Decline Amid Supply Pressure and Post-Holiday Confidence Concerns

Summary

This week, the polyethylene market stabilized after a price drop, showing a weak consolidation of 40-110 yuan/ton. The polyethylene supply remained at a high level, with the capacity utilization rate maintaining around 81%. There were no further uplifting news, leading to a fermentation of bearish sentiment, and downstream factories showed weak inventory accumulation, resulting in active market sales and price declines. However, as cost support has continuously strengthened, bearish sentiment has been digested, and with certain volume at low prices, market sentiment improved, leading to a reduction in low prices and a rise in the price center. As of September 25, the mainstream price for linear polyethylene in North China was 7120-7150 yuan/ton.

Recent focus points in the polyethylene market:

This week's polyethylene production is 642,700 tons, an increase of 1.84% compared to last week. Among them, the North China region saw a significant increase in production by 16.59%, while the Central China region experienced a significant decrease of 7.23%.

This week, the sample inventory of polyethylene production enterprises in China is 458,300 tons, a decrease of 6.53% compared to the previous week. The sample warehouse stock of polyethylene in society this week is 53,480 tons, a decrease of 2.17% compared to the previous week.

This week, the overall operating rate of downstream industries for polyethylene is 44.13%, an increase of 1.21% compared to last week.

Polyethylene profit decreased, oil-based profit fell by 23.44%, and coal-based profit fell by 41.53%.

This week, the US dollar prices in the Chinese market have dropped by 5-20 USD/ton, and prices are expected to continue to decline.

1. The downstream factories have a weak stocking effort, and the sentiment towards polyethylene is bearish, actively reducing prices to clear inventory.

Forecast: Around the next holiday period, Zhenhai Refining and Chemical's HDPE Line 3 and full-density Line 2 are scheduled for shutdown and maintenance. Lianyungang Petrochemical's HDPE Phase I and Baolai LyondellBasell's HDPE are planned to start operations. ExxonMobil's Huizhou LDPE and Guangxi Petrochemical have plans for recent production launches, with supply expected to remain at high levels. After the holiday, production companies are expected to accumulate inventory. Production companies are expected to actively reduce inventory to alleviate post-holiday pressure. Downstream factories will complete stocking up before the holiday, with trading sentiment gradually weakening. After the holiday, downstream factories have expectations for restocking based on immediate needs. The macro situation during the holiday period remains highly uncertain, and industry players lack confidence post-holiday, particularly due to the persistent high supply levels, which provide insufficient driving force for price increases. Therefore, in the short term, the polyethylene market is lacking confidence for the period after the holiday, actively offloading to reduce pressure, and prices are expected to remain stable with a slight decline, with mainstream linear prices in North China ranging between 7100-7200 yuan/ton.

This week, the plastic basis fluctuated slightly. At the beginning of the week, both futures and spot weakened due to bearish sentiment and inactive downstream restocking. However, low prices had a certain appeal, leading to downstream restocking at lower levels, which slightly strengthened the basis. In the middle of the week, improved market sentiment driven by costs led to cautious market optimism, with active shipments pushing up prices, slightly weakening the basis. Overall, the basis did not change much this week.

Figure 1: Polyethylene Price Spread Trend for 2024-2025 (Unit: Yuan/Ton)

Source of data: Longzhong Information

This week, domestic polyethylene production increased, with a decline of 1.84%. In terms of raw material sources, the production of coal-based polyethylene experienced a decrease of 0.22%, while oil-based polyethylene production saw a larger increase of 3.33%. Recently, some production enterprises have temporarily shut down their facilities, but the capacity utilization rate remains high. Supply is expected to continue on an upward trend next week.

Table 1 Domestic Polyethylene Weekly Supply and Demand Balance Sheet

Unit: Ten thousand tons

Data period: Last Thursday to this Wednesday

Before the short holiday, inventory successfully declined, and there is an expectation of further inventory reduction as the holiday approaches.

Prediction: Next week, the sample inventory of polyethylene production enterprises in China is expected to be around 410,000 tons, and the inventory is expected to maintain a downward trend. The main reason is that before the National Day holiday, production enterprises anticipate actively reducing inventory to alleviate post-holiday pressure. However, as downstream factories are gradually completing their stockpiling, the downward transmission of inventory is limited. Therefore, the production enterprises' inventory is expected to decline slightly.

In terms of the social sample warehouse inventory in the upcoming period, with the arrival of the National Day holiday, there may be demand-based purchasing behavior at the terminal. However, due to the current weak market conditions, the price focus has been continuously declining, and terminal procurement may be relatively cautious. It is expected that inventory in the next period will primarily decrease.

This week's sample inventory of polyethylene production enterprises in China is 458,300 tons, a decrease of 32,000 tons from the previous period, representing a week-on-week decline of 6.53%. The inventory trend has shifted from rising to falling. The main reason is that, approaching the short holiday, some production enterprises have lowered their ex-factory prices to actively reduce inventory. Additionally, because market prices are at a low level, downstream factories are replenishing their inventory when prices are low, resulting in improved transactions and thus a decrease in production enterprise inventory.

Figure 2 Inventory Trend of Polyethylene Production Enterprises from 2023 to 2025 (Unit: Ten Thousand Tons)

Data source: Longzhong Information

As of September 19, 2025, the inventory of polyethylene in social sample warehouses is 53.48 tons, a decrease of 11,900 tons from the previous period, down 2.17% month-on-month, and down 13.35% year-on-year. The inventory of imported polyethylene in China decreased by 1.80% month-on-month and is down 23.83% year-on-year. The inventory of HDPE in social sample warehouses increased by 1.17% month-on-month but is down 58.64% year-on-year; the inventory of LLDPE decreased by 4.23% month-on-month and is up 58.18% year-on-year; the inventory of LDPE decreased by 2.94% month-on-month and is up 103.15% year-on-year. Currently, the demand for agricultural films and packaging films is slowly rising, which has contributed to the reduction in inventory levels to some extent.

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

Data source: Longzhong Information

During this period (September 19 - September 26), the polyethylene production was 642,700 tons, an increase of 1.84% compared to the previous week. Among them, the production in North China increased significantly by 16.59%, while the production in Central China decreased significantly by 7.23%. There are many planned maintenance units in September, but recently there are not many unplanned maintenance units, with maintenance losses expected to be 548,900 tons, a month-on-month increase of 19.88% and a year-on-year increase of 54.75%.

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

Data source: Longzhong Information

Table 2 Weekly Production of Polyethylene in Various Domestic Regions

Unit: 10,000 tons

Data period: Last Friday to this Thursday

This week, the US dollar portion in the Chinese market has partially declined, with a range of 5-20 USD/ton. As of now, LDPE prices are at 980-1050 USD/ton, and LLDPE prices are at 810-850 USD/ton.

In August, the import volume was 950,200 tons, a year-on-year decrease of 22.14%. However, in September, market offer activities increased significantly, with sources including India, the United States, and the Middle East, mainly consisting of HDPE injection molding and LDPE products. Prices continued to decline, and the market showed willingness to take over low-priced deals. However, the overall performance of LDPE products was relatively cautious, mainly due to expectations of increased domestic resources in the Chinese market. Attention should be paid to the arrival situation, and prices are expected to continue to slightly decrease.

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

Table 4 Detailed Schedule of Polyethylene Import Shipments

3. Downstream demand for agricultural film is gradually improving, while new orders for packaging film have noticeably decreased.

Forecast: The downstream operating rate is expected to decline next week, with a decrease of 3.148%. By product category, the agricultural film industry operating rate is expected to rise by 1%, the packaging film industry operating rate is expected to decrease by 4%, and the operating rates in the hollow, injection molding, and drawing industries are mainly declining, while the pipe industry operating rate is expected to remain stable. Downstream agricultural film demand is gradually improving, and new orders for packaging film are significantly reduced.

1. Supply and demand both increase, and the market actively destocks.

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Price unit: yuan/ton

Price Cycle: Weekly Average Price (Friday of Last Week to Thursday of This Week)

Product pricing area: mainstream prices in the domestic market.

From the perspective of upstream and downstream transmission, the international crude oil exceeded expectations with a stronger trend, providing increased support. Downstream factories resumed operations on schedule, leading to increased demand. However, the polyethylene capacity utilization rate has risen, creating some pressure on supply. The market is actively reducing prices to deplete inventory and alleviate post-holiday pressure. Polyethylene transactions have improved, with prices mixed. Among them, the price of HDPE increased by 0.51%, LDPE prices remained stable, and LLDPE prices decreased by 0.59%. Polyethylene profits have declined, with oil-based profits down by 23.44% and coal-based profits down by 41.53%.

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

Data Source: Longzhong Information

2. Downstream orders are slowly following up, and the operating rate is rising slowly.

This week's overall operating rate of polyethylene downstream industries is at 44.13%, an increase of 1.21% compared to last week, and is expected to decrease by 3.14% next week.

In the agricultural film industry, the operating rate is 32.86%, an increase of 6.11% compared to the previous period. Orders in the greenhouse film market are slowly progressing, with stable production among large-scale enterprises. The operating rate of small and medium-sized enterprises has slightly increased, but overall operating levels are weaker compared to the same period in previous years. The demand for garlic mulch film is average, with limited improvement in operating rates. A few enterprises have increased their operating rates due to bidding orders, while other mulch film markets remain in the off-season, and enterprises mainly shut down.

In the PE packaging film industry, as the end of the month approaches, although trading in the terminal demand market has slowed and there is limited follow-up on custom orders, the support from some undelivered orders has kept enterprises operational. The accumulation of regular sporadic short-term orders has led to a slight month-on-month increase in enterprise operations.

Figure 6: PE Downstream Operating Rate Trend Chart for 2023-2025

Data source: Longzhong Information

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

Data Source: Longzhong Information

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

Data source: Longzhong Information

Under the fundamentals of supply exceeding demand, it is difficult to change the overall weak trend of oil prices.

Prediction: OPEC+ maintains an increase in production, major oil-producing countries keep output at high levels, and the pressure of oversupply intensifies. Slowing economic growth and energy structure transition suppress terminal demand. Although geopolitical turmoil may bring some risk premiums, it is difficult to change the overall weak trend of oil prices under the fundamental condition of supply exceeding demand. It is expected that there is room for international oil prices to fall next week, with WTI possibly operating in the range of $62-65 per barrel and Brent in the range of $66-69 per barrel. Under the fundamental condition of supply exceeding demand, it is difficult to change the overall weak trend of oil prices.

This week, the cost difference between oil-based and coal-based polyethylene decreased by 43 yuan/ton, while the profit difference expanded by 53 yuan/ton. Overall, profits have declined, with a significant drop in coal-based line profits, decreasing by 269 yuan/ton.

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

Source of data: Longzhong Information

Table 5 Domestic Polyethylene Market Cost and Profit Margin Analysis Table

Under supply pressure, confidence is insufficient after the holiday, and polyethylene is expected to remain stable with a downward trend.

Recent key focus: unexpected positive news, downstream factory procurement, inventory accumulation, supply changes, cost support.

Table 6 Forecast of Domestic Polyethylene Market Supply and Demand Balance

Unit: 10,000 tons

Supply: In the next 1-3 weeks, domestic polyethylene supply is expected to show an upward trend. The low point will be 671,100 tons in the third week, and the high point will be 679,000 tons in the second week. Around the short holiday in the next cycle, there will be some changes in production facilities, with the new ExxonMobil Huizhou LDPE unit planning to start up. Supply is expected to remain at a high level, with anticipated inventory buildup.

Demand: The downstream operating rate is expected to decline next week, with a decrease of 3.148%. By product category, the agricultural film industry's operating rate is expected to increase by 1%, while the packaging film industry's operating rate will decline by 4%. The operating rates in the hollow, injection molding, and drawing industries are mainly expected to decrease, and the pipe industry operating rate is expected to remain stable. Downstream demand for agricultural film is gradually improving, while new orders for packaging film have significantly decreased.

Plastic film: The average operating rate of agricultural film enterprises has increased by about 1%. Although the demand for agricultural film is gradually improving, it is constrained by the National Day holiday factors, and the overall market for agricultural film is not expected to see significant changes during the holiday and the days leading up to it. According to the patterns of previous years, the demand for agricultural film usually enters a concentrated period after the holiday, and enterprise production will also enter a peak season, with room for further improvement in operating rates. The digestion speed of raw materials for agricultural film will also accelerate accordingly. However, the current demand for agricultural film is below expectations, and there is uncertainty in the price trend of raw materials. Companies are cautious in their procurement, primarily replenishing as needed. Overall, the operating rate and raw material inventory level of the agricultural film industry are expected to improve after the holiday.

PE Packaging Film: The average operating rate of sample enterprises in the PE packaging film industry is expected to decrease by about 4%. Some orders are being delivered gradually, and there is a noticeable reduction in new orders. The operating rate of enterprises is expected to decline. After the holiday, companies are primarily focused on fulfilling pre-holiday orders. Market transactions are relatively sluggish, with limited purchasing from end-users. Enterprises are maintaining operations at a relatively low capacity.

Cost aspect:

Crude Oil: OPEC+ maintains a production increase stance, with major oil-producing countries keeping output at high levels, leading to increasing oversupply pressure. Economic growth slowdown and energy transition are suppressing end demand. Although geopolitical turmoil may bring some risk premium, it is difficult to change the overall weak trend of oil prices under the fundamental condition of supply exceeding demand. It is expected that there is room for a decline in international oil prices next week.

Ethylene: The market's ample supply situation may continue into next week, with bargaining power tilting towards downstream. However, as the National Day holiday approaches, downstream restocking pace may accelerate next week, and the decline in ethylene prices is expected to slightly narrow. In the USD market, domestic demand for USD imports in October has slightly decreased, and suppliers may offer discounts.

Figure 10 Comparison of Quarterly Price Ranges for Polyethylene in 2024-2025 (RMB/ton, 10,000 tons)

Data source: Longzhong Information

Conclusion (Short-term): The next cycle coincides with the period before and after the short holiday. Zhenhai Refining & Chemical's HDPE Line 3 and full-density Line 2 are scheduled for shutdown and maintenance. Lianyungang Petrochemical's HDPE Phase 1 and Bora LyondellBasell HDPE are planned to start operations. ExxonMobil's Huizhou LDPE and Guangxi Petrochemical have plans for production commencement in the near future. Supply is expected to remain at a relatively high level, and production companies are expected to accumulate inventory after the holiday. They plan to actively reduce inventory to alleviate post-holiday pressure. Downstream factories are expected to complete stocking before the holiday, leading to a gradual weakening of trading sentiment. After the holiday, downstream factories are expected to have just-in-time replenishment needs. The macroeconomic outlook for the short holiday is quite uncertain, and market participants lack confidence for the period after the holiday, especially since supply has been at a relatively high level for a long time, resulting in insufficient drivers for price increases. Therefore, in the short term, the polyethylene market lacks confidence for the period after the holiday, and there will be active selling to alleviate pressure. Prices are expected to be stable with a slight decline, with the mainstream price for linear low-density polyethylene in North China expected to be between 7,100-7,200 RMB/ton.

Conclusion (Medium to Long Term): In October, the two full-density production lines at Guangzhou Petrochemical, the full-density line at Shanghai Petrochemical, and the two lines at Maoming Petrochemical are scheduled for shutdown and maintenance. Wanhua Chemical's LDPE is also planned for mid-term maintenance. Previously shut down and maintained facilities are gradually resuming operations, and there is no significant increase in imported resources. Supply is expected to show an upward trend. Downstream demand is anticipated to continue improving, with the "Golden October" seasonal consumption boost being quite strong. Social sample warehouse inventories are also in a seasonal decline range, while the macroeconomic situation awaits further guidance. Therefore, in the medium to long term, the polyethylene market is expected to show a strong trend in October.

Risk Warning:

Upside risks: 1. Unexpectedly positive factors boost the market. 2. Continuous strengthening of cost support. 3. Slow accumulation of inventory in social sample warehouses. 4. Active purchasing by downstream factories. 5. Increased shutdowns of facilities, resulting in supply reduction beyond expectations.

Downside risks: 1. No unexpected positive factors to boost. 2. Weakening support from the cost side. 3. Social sample warehouse inventory accumulates beyond expectations. 4. Downstream factories mainly remain in a wait-and-see mode. 5. Supply continues to rise.