Overall trend: Polyethylene will experience a fluctuating downward trend throughout 2025, with an accelerated bottoming out in December. The price centers of the three major varieties will continue to shift downwards, while LLDPE and HDPE will weaken simultaneously. LDPE will show a "slow decline at first, a slight rebound in the middle, and a significant decline at the end of the year" throughout the year, with LLDPE experiencing the deepest decline. The core contradiction of polyethylene is that supply and demand imbalance is the main factor, and cost collapse is the secondary factor. At the end of the year, prices will hit a low for the year.

Core contradiction: supply-demand imbalance as the main factor, supplemented by cost collapse

Supply side: Concentrated release of production capacity, exacerbation of oversupply

Capacity expansion and acceleration: By 2025, the domestic PE production capacity will exceed 5 million tons, with a capacity growth rate of about 16%. New facilities such as Guangxi Petrochemical and ExxonMobil Huizhou will be put into operation, with a year-on-year increase of+18.85% in production from January to November, and supply pressure will continue to increase.

Production and inventory: The production rate in the second half of the year is about 85% (lower than previous years), but the increase in new production capacity far exceeds the amount of maintenance losses. The high inventory levels of enterprises and society have forced petrochemicals and traders to lower prices and reduce inventory.

External impact: The influx of low-priced goods from the Middle East, coupled with import substitution and low price competition, further suppresses domestic prices.

Demand side: downstream weakness, low willingness to stock up

Low operating rate: The annual operating rate of downstream industries such as agricultural film, packaging film, pipe materials, injection molding, etc. is generally in the range of 30% -55%, with limited order increment and on-demand purchase becoming mainstream.

Weakening of seasonal characteristics: The traditional peak season effects of "gold three silver four" and "gold nine silver ten" are not significant.

Cost side: Crude oil decline+ process competition, supporting comprehensive weakening

Crude oil linkage: The cost of raw materials for oil to polyethylene has decreased synchronously with crude oil, and the profit of coal to PE has turned from profit in the first half of the year to loss. The expansion of coal chemical industry brings low-priced supply, and the mutual compression between oil and coal production further lowers the price center.

Forecast for 2026:

Supply side: Expansion of production continues, with a low pace at the beginning and a high pace at the end

1. New production capacity and pace: In 2026, the new production capacity will be about 6.15 million tons, with a growth rate of 15.28%. The new production capacity is mainly concentrated in the second half of the year, showing a "low in the beginning and high in the end" production pace.

2. Construction and Production: From January to November 2025, the cumulative domestic PE production was 30.1838 million tons, a year-on-year increase of 18.85%; In 2026, with a high production capacity base, the output growth rate may remain above 15%, but high inventory and profit compression will force some high cost devices to reduce load or undergo maintenance.

Demand side: Weak domestic demand growth, urgent need for export digestion

The growth rate of domestic demand has slowed down, and the apparent consumption is expected to reach 41.5 million tons, a year-on-year increase of 7.8%, which is lower than the supply growth rate. Although the demand for downstream industries such as agricultural film and packaging film fluctuates seasonally, the overall increase is limited and it is difficult to digest the rapidly growing supply. Export becomes key pressure relief valve: In the context of severe overcapacity, actively exploring overseas markets has become an inevitable choice for the industry.

Cost and Macro: Price Pressure, Industry Accelerates Transformation

Fragile cost support: The price of polyethylene's main raw material (crude oil) is affected by geopolitical factors and fluctuates violently. In the context of oversupply, the cost side is difficult to provide solid support and may instead become a driving force for price decline.

Macro and policy impact: The "anti involution" policy: whether the policy aimed at eliminating outdated production capacity can be effectively implemented and reverse the situation of oversupply is a major uncertain factor in 2026.

Accelerating industry transformation: Intense competition will force the industry to shift from "scale expansion" to "quality improvement". The competitiveness of future enterprises will be reflected in high-end, differentiated products, and integrated cost control.

Outlook for 2026: Continuous expansion of production capacity, continued loose supply and demand: Short term: Downstream stocking before and after the Spring Festival may bring a slight rebound, but it is difficult to change the long-term surplus pattern. Long term: There will still be pressure to expand capacity in 2026, and the supply-demand contradiction may continue. The upward space for prices is limited, and it is necessary to focus on the pace of new capacity deployment and the trend of crude oil prices.

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