China's PE Market Struggles Amid Weak Demand and High Inventory

Key Highlights

• Polyethylene Prices: HDPE, LLDPE, and LDPE prices showed location-based variations, with LDPE remaining the highest-priced segment.
• Supply-Demand Imbalance: Weak demand and high inventories keep prices under pressure, despite seasonal agricultural film demand.
• Industry Updates: ExxonMobil begins trial production of MLLDPE in China; Pucheng shuts PP & LLDPE units for maintenance.
• Market Outlook: Continued price pressure is expected due to unstable crude oil costs, oversupply, and weak buying interest.

Polyethylene Prices Show Regional Variations

• HDPE prices varied across locations, with HMEL HDPE Films (F0050D) in Ahmedabad priced at ₹92,550/MT.
• HDPE IM in Daman at ₹92,000/MT, HDPE Raffia in Bhiwandi at ₹94,110/MT, and HDPE PE100 Natural in Mundra at ₹89,310/MT. 
• In the LLDPE segment, HMEL LLDPE Extrusion Coating (D0120L) in Ahmedabad stood at ₹96,260/MT.
• Roto Moulding (R0536L) in the same location was priced at ₹98,870/MT. 
• LLDPE 1 MFI Non-Slip in Mundra was available at ₹95,650/MT, and LLDPE 2 MFI Non-Slip in Bhiwandi at ₹95,980/MT. 
• LDPE prices remained elevated, with LDPE 4 MFI Slip GP and LDPE 2 MFI Non-Slip in Bhiwandi both priced at ₹1,12,000/MT. 
• LDPE Lamination in Mundra reached ₹1,21,000/MT.

Weak Demand and High Inventory Levels Pressure Market

• The polyethylene (PE) market is experiencing weak demand and sufficient supply, leading to a bearish sentiment among market participants. 
• Crude oil prices remain volatile due to ongoing Russia-Ukraine peace talks and easing tensions in the Middle East, impacting PE production costs. 
• Despite agricultural film entering its peak season in March, actual demand has been lower than expected, with order volumes remaining weak. 
• Manufacturers and traders are lowering prices to stimulate sales, while downstream buyers remain cautious and limit replenishment efforts. 
• Meanwhile, inventory levels remain high, putting additional pressure on the supply side.

New Production and Shutdowns Impact Global Supply

• ExxonMobil has started trial Production at its Metallocene Linear Low-Density Polyethylene (MLLDPE) Plant and is aiming to achieve commercial production by end-March, 2025. The Plant is located in Huizhou, China with a production capacity of 1.2 Million Tons/Year.
• Pucheng Clean Energy Chemical Company has shut down its PP and LLDPE Units for maintenance work. The Units are located in Weinan, China with a PP production capacity of 440,000 Tons/Year and an LLDPE capacity of 300,000 Tons/Year.
• Malaysian Producer offered its LDPE Film at US$ 1210/MT, LDPE Injection and Lamination grades at US$ 1310/MT, CIF Vietnam for March, 2025 shipment.
• Inner Mongolia Baofeng III has started its new No.3 HDPE/LLDPE Swing Unit. The Unit is located in Inner Mongolia, China with an expected production capacity of 550,000 Tons/Year.

Expert Opinion: Continued Price Fluctuations Amid Crude Volatility

With ample supply and weak demand, PE prices are expected to remain under pressure. The market lacks strong bullish factors, and the cautious sentiment among buyers is likely to persist. As crude oil costs remain unstable, PE is expected to trade with a weak trend and face continued fluctuations in the near term.