Pressure on Inventory Remains High, Polyethylene Market Continues to Face Downward Pressure

After the National Day holiday, the inventory levels of polyethylene are at relatively high levels. Although there is some demand for restocking from downstream factories after the holiday, the overall pressure to reduce inventory remains significant. Coupled with the gradual realization of new production capacity expectations, the market supply pressure continues to increase. Overall, under the dominance of a relaxed supply-demand situation, it is expected that polyethylene prices will continue to be under pressure in the short term, with a potential downward shift in focus.

Data Source: Jin Lian Chuang

The structural differentiation on the demand side is evident.

As temperatures gradually decrease in the northern regions, the demand for greenhouse films is starting to pick up. Some companies have already begun their autumn stocking. However, due to the delay in farming activities caused by the leap month in the lunar calendar and the relatively low profits from agricultural products, farmers are less willing to replace greenhouse films, which constrains the overall industry operating levels. The demand for mulch films is uneven across regions. In the northwest, the operating levels have slightly increased due to support from tender orders and garlic film demand. However, most other regions remain in the off-season, and the overall operating rate for mulch films remains relatively low.

The expectation of increased supply pressure

Recently, Daqing Petrochemical Linear/The low-pressure, Tianjin Petrochemical linear, and Guangdong Petrochemical full-density maintenance plans provide some support for supply, but the upcoming production capacity of ExxonMobil high-pressure and Guangxi Petrochemical is expected to increase supply.

Market Outlook

In September, the peak season demand did not meet expectations, and market transactions remained primarily demand-driven. The phenomenon of a lackluster peak season has become the norm in the industry, and the supply-demand conflict has not been effectively alleviated. Against the backdrop of new production capacity being released and limited demand stimulation, polyethylene prices are expected to continue facing downward pressure. Attention should be focused on the demand for agricultural films and the actual implementation of new production capacity. If the supply-demand structure cannot be effectively improved, the market may continue to experience weak and fluctuating trends.