In February 2026, the polyethylene market failed to sustain January's upward momentum, continuing its downward trajectory amid ample supply and shrinking demand. Linear polyethylene and high-pressure polyethylene products were particularly affected, while low-pressure polyethylene saw relatively smaller declines. The primary driver behind the market's downturn was the fundamental supply-demand imbalance characterized by “strong supply and weak demand.”
Entering February, alternating reports of escalation and de-escalation in the Middle East geopolitical conflict caused oil prices to fluctuate wildly between “supply risk premiums” and “demand concerns,” leaving the market uncertain. While any unexpected surge in oil prices driven by geopolitics would swiftly translate into cost support expectations for polyethylene through feedstock channels like naphtha and ethylene, triggering strong rallies in LDPE futures and interrupting or delaying the spot market's downward trend—even sparking technical rebounds from short covering— However, this cannot alter the demand contraction caused by the Spring Festival holiday in February. Short-term price hikes detached from supply-demand fundamentals are unlikely to provide sustained support for the polyethylene market.
For the remainder of February, the polyethylene market is also unlikely to sustain a “one-sided decline.” It will likely enter a low-level oscillation pattern, caught in a tug-of-war between fluctuating oil prices and weak demand, with the overall price center shifting slightly downward. Two key points warrant attention: If geopolitical tensions escalate, blocking or closing critical shipping lanes and triggering a sharp oil price surge, expectations of reduced imports could intensify, potentially pushing polyethylene prices higher against fundamentals. Conversely, if unexpected easing of tensions leads to an unexpected oil price drop, easing import reduction expectations, the supply-exceeding-demand fundamental imbalance would dominate market sentiment, potentially accelerating the market's bottoming process.
Barring force majeure events, the polyethylene market will likely experience weak fluctuations for the remainder of February amid core contradictions: shrinking domestic demand, passive inventory accumulation, and ample upstream supply. The market awaits post-holiday demand recovery and the implementation of domestic macro policies in March, watching for potential substantive positive catalysts. Currently, while polyethylene product prices across the board are near multi-year lows, significant divergence persists regarding whether current levels represent the “final bottom.” This uncertainty stems from expectations of substantial new capacity additions in 2026 (primarily concentrated in the second half). Furthermore, should global macroeconomic indicators signal a recession, commodity prices could face further downward pressure, potentially opening additional downside space for polyethylene.
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