Chinese PE Market Faces Margin Pressure Amid Stable Demand and Diverging Inventory Trends

Key Takeaways

• Polymer Prices Stay Stable: LDPE, LLDPE, and HDPE prices were steady, with only minor week-on-week changes.
• Ethylene Margins Improve: MTO and FCC-based ethylene margins saw slight recovery; FCC moved back into positive territory.
• Supply Pressure in HDPE: High throughput losses from scheduled turnarounds and curtailments impacted HDPE availability.
• Mixed Downstream Demand: Agricultural film and packaging film activity stayed strong; raffia and injection molding demand was flat to soft.
• Short-Term Outlook: Prices likely to stay in a narrow range; upside possible if HDPE supply tightens and demand picks up in packaging, agri, and pipe sectors.

Polymer Price: Stable Across LDPE, LLDPE & HDPE

In the first week of June 2025, PE-related product prices remained relatively stable across categories, though slight fluctuations were observed:

• LDPE, LLDPE & HDPE Film prices (in Yuan/t) showed mild week-on-week variation, reflecting stable raw material costs and moderate buying activity.
• Ethylene (Yuan/t) prices from MTO processes improved to 642.06 Yuan/t, up by 123.10 Yuan/t from last week, indicating easing cost pressures. Ethylene prices from Ethane Cracking also rose slightly to 647.70 Yuan/t.
• Methanol and Recycled LDPE continued to follow a narrow price band, maintaining competitive edge in certain low-end applications. 
• On a USD/t basis, ethylene from FCC processes rose to 109.19 USD/t, a notable rebound from last week's negative margin, signalling margin recovery in international trade.

Polymer Demand and Supply Dynamics

Throughput losses remained high for HDPE, peaking near 12–14 kt, driven by planned turnarounds and operating curtailments in East China.

LLDPE and LDPE throughput showed steady trends, reflecting more stable production schedules.

PE downstream operating rates varied by segment:

• Agricultural film and PE packaging film showed stronger activity, supported by seasonal demand.
• PE pipe and blow moulding segments continued to operate at moderate levels. 
• Injection moulding and raffia showed a flat or slightly declining trend.

Polymer Industry News: Margins Under Pressure

• Production profits for ethane-based PE dropped significantly, with East China margins falling by 226.10 Yuan/t to 507.50 Yuan/t, due to weak end-product pricing and firm naphtha costs.
• Ethylene production using MTO remains under pressure, though the recovery in margins may lead to increased operational rates in coming weeks. 
• Inventory levels among producers and traders showed divergence; producer stockpiles stayed elevated, while trader inventories trended lower—hinting at some offloading at discounted prices.

Market Expectation: No Major Fluctuations

• Short-term pricing is expected to remain range-bound with limited upside, as feedstock costs stabilize and demand remains moderate. 
• Supply constraints, especially in HDPE, may offer temporary support to prices if downstream demand strengthens. 
• Downstream converters are likely to adopt a cautious approach, purchasing hand-to-mouth due to inventory burdens and uncertain macroeconomic cues.
• Looking ahead, any firm rebound in PE prices would likely require a combination of upstream cost push (especially in naphtha and crude) and a visible uptick in demand from packaging, agriculture, and pipe segments.