PE market continues consolidating as peak season demand falls short of expectations

Since August, the domestic PE market has continued to fluctuate. Although expectations were high for a traditional seasonal rebound during the peak season in Sep, the market has so far failed to gain momentum and remains trapped in a pattern of minor ups and downs with no clear direction. This stalemate is primarily due to the absence of significant changes in supply and demand dynamics. With a sluggish macroeconomic environment, the market is struggling to break out of the current cycle of uncertainty.

On the supply side, new startups and plant maintenance occurred simultaneously.

In the first eight months of 2025, China's polyethylene market witnessed multiple rounds of concentrated new startups. In August, 400kt/year HDPE plant of PetroChina Jilin PC II was successfully commissioned as planned and achieved stable operation by September, adding approximately 35,000 tons of monthly supply to the market. This has effectively bolstered the overall domestic PE supply. Currently, the product grades 6023M and 5822M from the plant are being progressively distributed in key regions such as East China and North China, with offers generally 50-100yuan/mt lower than mainstream market prices, exerting some pressure on regional market conditions.

Furthermore, the operation of domestic PE plants since August has been characterized by concentrated maintenance and restart arrangements, leading to frequent fluctuations in operating rates. Due to planned and unplanned shutdowns at several petrochemical plants, the overall operating rate has consistently fluctuated within a narrow range of 75–80%, significantly lower than the approximately 85% level recorded during the same period last year. In terms of maintenance scale, the capacity loss between August and September further increased compared to the previous period, resulting in a phased contraction in domestic supply. Although some large-scale plants are scheduled to gradually restart in mid-to-late September, the extended duration of maintenance, its widespread geographic coverage, and anticipated additional maintenance plans continue to constrain market supply. This has, to some extent, mitigated the supply pressure from new startups and supported the drawdown of social inventories.

On the demand side, demand in the peak season has fallen short of expectations, with overall operating rates remaining low.

In previous years, September typically brought a seasonal uptick in agricultural film demand, which provided some support to the PE market even without significant price increases. While current downstream demand has improved slightly compared to August, the anticipated peak demand season recovery has been weaker than expected. Factors such as delayed autumn sowing in northern regions and flooding in southern areas have postponed the timeline for agricultural film demand. As a result, operating rates in the agricultural film industry remain subdued, with procurement largely limited to small, necessity-driven orders rather than large-scale replenishment.

Additionally, other downstream sectors, such as packaging and daily-use plastic products, have shown no significant improvement. Weak export orders for certain manufacturing industries have further dampened PE demand.

In summary, the underwhelming peak season in the PE market is the result of multiple factors, including supply-demand imbalances, the rollout of new capacity, and weaker-than-expected demand. Market participants have shifted from earlier optimism to a more cautious and rational wait-and-see approach, suggesting that prices are unlikely to experience major fluctuations in the short term.