In the first quarter of 2025, domestic PE capacity increased by 1.9 million tons, and domestic PE production grew alongside the capacity expansion. In January and February 2025, domestic PE production reached 2.7777 million tons and 2.5605 million tons, respectively. In January 2025, monthly PE production hit a record high.

Data source: JLC Network Technology

Due to the traditional Spring Festival holiday in 2025, there will be fewer maintenance shutdowns of domestic PE facilities in January and February. The operating rate of PE facilities will increase significantly year-on-year and month-on-month. The operating rate of PE facilities will be around 85% in January and around 87% in February. With the increase in capacity and the rise in operating rate, domestic production will grow significantly year-on-year.

Source: JLC

Due to the traditional Spring Festival holiday in January and February, downstream factories suspended operations and resumed production slowly after the holiday, leading to persistently high domestic PE inventory levels during these two months. In March, downstream demand continued to rise, but constrained by new production capacity coming online, persistently high inventory levels in the mid- and upstream sectors, and lackluster terminal orders, market sentiment remained cautiously bearish. Terminal factories made purchases based on rigid demand at lower prices, keeping the market weak. This further slowed inventory reduction among upstream producers and middlemen, while ongoing supply-side pressures continued to weigh on the market, suppressing price performance.

In April, the domestic plant maintenance will increase, but the products from the 550,000-ton full-density plant of Inner Mongolia Baofeng, which was put into operation at the end of March, are expected to reach the market gradually in April. Moreover, the 250,000-ton linear plant of Shandong New Era and the 1.23 million-ton linear metallocene plant of ExxonMobil Huizhou are scheduled to start production at the beginning of the month, which is expected to maintain the supply pressure in April. The PE market situation will still be under significant pressure.