HDPE Market Struggles Amid Oversupply and Weak Demand

Key Highlights

• Price Trends – HDPE prices vary across India, with HMEL HDPE BM at ₹83,050/MT (Ahmedabad) and HDPE PE100 Black (Prime) at ₹92,000/MT (Mumbai & Chennai).
• Supply Surge – China faces a severe supply glut with new capacities from Yulong Petrochemical (1.3 MTPA) and Baofeng Inner Mongolia (1.1 MTPA by 2025), worsening the oversupply scenario.
• Market Weakness – HDPE prices in China hit near five-year lows; HDPE film assessed at $875/MT (Platts), while HDPE injection dropped to $855/MT, the weakest since August 2020.
• Bearish Outlook – HDPE prices are expected to decline further post-Lunar New Year due to high inventories, weak demand, and falling crude oil prices impacting cost support.

HDPE Prices Under Pressure Amid Surging Supply & Weak Demand

• In Ahmedabad, HMEL HDPE BM is priced at ₹83,050 per metric ton. Meanwhile, HDPE HM Films (Prime) is available in Mundra at ₹90,000 per metric ton. 
• In Mumbai, HDPE PE100 Black (Prime) is being traded at ₹92,000 per metric ton, while in Chennai, HDPE PE100 Natural (Prime) is also priced at ₹92,000 per metric ton.

China’s HDPE Market Faces Five-Year Lows – Outlook Remains Bearish

• The HDPE market in China is currently facing significant headwinds due to a combination of sluggish demand and excess supply. 
• Several new production capacities have come online, further intensifying the supply glut. Yulong Petrochemical recently commenced commercial operations at its new 300,000 metric tons per year HDPE unit, along with two 500,000 metric tons per year HDPE/LLDPE swing units. 
• Additionally, Baofeng Inner Mongolia is set to introduce two more 550,000 metric tons per year HDPE/LLDPE swing lines in 2025, which will further strain the supply side.
• Meanwhile, demand has weakened as downstream industries remain cautious, especially with lower production rates in the agricultural film sector and reduced stockpiling ahead of the Lunar New Year holidays.

Oversupply Weighs on HDPE Prices as Demand Struggles to Recover

• Prices of HDPE in China have plunged to near five-year lows, driven by persistent oversupply and slow demand recovery.
• As of February 7, Platts assessed HDPE film at $875 per metric ton, marking the lowest level since June 2020. Similarly, HDPE blow molding CFR Far East Asia stood at $865 per metric ton, and HDPE injection at $855 per metric ton, the weakest levels since August 2020. 
• Additionally, the nearly 5% decline in international crude oil prices over the past five trading days has further weakened cost support for polyethylene prices. Futures markets have also reflected this bearish trend, with the Dalian Commodity Exchange PE L2505 contract facing downward pressure. 
• The market also faces external uncertainties, with recent geopolitical trade tensions escalating. While the newly imposed 10% tariffs on Chinese goods into the U.S. do not directly impact plastics and chemical imports, China’s countermeasures—tariffs on U.S. coal, LNG, and crude oil—may have indirect effects on energy costs, influencing production economics for polymer manufacturers.
• Traders quoted HDPE Raffia from India at US$ 910/MT, T/T, CFR Qingdao basis for February, 2025 arrival.
• Traders quoted HDPE Film Grade F1 from Saudi Arabia at US$ 880/MT, T/T, CFR Shanghai basis for March, 2025 arrival.

Expert Opinion: Falling Prices, Growing Inventories & Geopolitical Risks 

• It is expected that the outlook for HDPE will remain bearish in the near term due to a persistent supply overhang and a slow recovery in demand. Further price declines are anticipated post-Lunar New Year, as high inventory levels and weak buying sentiment continue to weigh on the market. 
• As a result, HDPE prices are likely to remain under pressure in the coming months unless there is a significant increase in demand or supply adjustments.