PE Market Sees Mild Recovery Amid Weak Demand and Ample Supply in July

Key Highlights

• Minor price drops seen in LLDPE, LDPE, and HDPE
• Weak demand continues; agri-film sector off-season
• Plant restarts increase domestic supply
• Positive sentiment aided by policy, but upside limited

Price Trends: PE Grades Show Marginal Decline in July

• In July, PE prices showed mixed movements:
  1. LLDPE fell marginally from $1,048/ton to $1,045/ton, a 0.27% decrease.
  2. LDPE dipped from $1,337/ton to $1,332/ton, down 0.35%.
  3. HDPE saw the sharpest drop of 1.69%, from $1,136/ton to $1,116/ton
• The first half of the month was marked by weak sentiment, but the second half saw a mild recovery, especially in LDPE and LLDPE, though HDPE lacked momentum.

Demand & Supply: Weak Consumption Meets Adequate Supply

• Demand Side: The agricultural film sector remained in its off-season, leading to weak downstream consumption.
• New orders were limited, and operating rates stayed low.
• Procurement activity was cautious, with buyers avoiding bulk purchases due to uncertain price movements.
• Supply Side: Maintenance shutdowns were lifted, and idle units resumed production, increasing market supply.
• Despite this, domestic policy support and supply-side reform 2.0 offered psychological support to the market.
• Overall, supply remained adequate to meet the weak demand.

China Futures Price Update – PE/PP/PVC

(September Contracts)

• PP closed lower by 3 RMB at 7066 (Aug 5) and further dropped 9 RMB to 7060 today.
• LLDPE gained 12 RMB to 7288 and edged up 7 RMB today to 7283.
• PVC rose by 14 RMB to 4992 and increased 8 RMB today to 4986.

Plant Update – China

• Lianyungang Petrochemical is set to shut its Ethane Cracker in mid-August 2025 for planned maintenance in Jiangsu, China having capacity of 1.25 million tons/year of Ethylene
• Global Trends: Stable International PE Market Amid Low Demand.
• International PE markets remain stable amidst weak global demand.
• A significant gap persists between domestic list prices and landed costs, limiting buying interest.
• Producers are expected to launch fresh schemes to drive sales volumes in the coming days.

Market Expectations: Cautious Optimism With Limited Upside Potential

• Sentiment is slightly positive due to government policy backing, but the fundamentals of demand and supply show only modest improvement.
• Crude oil volatility and the resulting cost support may help cushion sharp declines, but significant upside is unlikely in the near term.
• Market participants anticipate narrow fluctuations with limited room for a strong price rebound unless demand strengthens notably.