Uncertainty regarding the expiration of temporary import duty waivers and frequent fluctuations in the rupee exchange rate have led Indian polyethylene importers to generally pause new orders, creating a strong "wait-and-see" atmosphere for overseas procurement. Compounded by ongoing geopolitical conflicts in the Middle East disrupting global petrochemical supply chains, international PE prices have gradually retreated after an initial surge, while supply-demand dynamics and prices across Asian nations have diverged significantly. Driven by the transmission of overseas market trends, a rebound in domestic supply, and the off-season slump in end-user demand, domestic PE spot prices fluctuated within a narrow range last week; price volatility was limited, and trading was driven primarily by essential needs rather than speculation.

I. Overview of the International PE Market

(A) Indian Market: Procurement Stalls, Prices Retreat

India relies heavily on imported polyethylene. Since April, the country has temporarily waived the 7.5% import duty on 40 types of petrochemical products, including polyethylene and polypropylene. With this policy set to expire on June 30 and no clear extension announced yet, importers are hesitant to book shipments. Meanwhile, volatility in the USD/INR exchange rate has further dampened purchasing enthusiasm.

Regarding prices, Indian PE rates have trended downward since April, driven by the benefits of the duty waiver and the replenishment of overseas supplies. As of the week ending June 5, mainstream CFR quotes for Linear Low-Density Polyethylene (LLDPE) in India stood at $1,250–$1,330/ton, while CFR quotes for Low-Density Polyethylene (LDPE) were $1,500–$1,600/ton—marking a significant drop from April highs. Domestic production remains stable, with state-owned petrochemical plants resuming operations to replenish stock. Concurrently, downstream processors have reduced operating rates due to earlier high prices and labor issues; consequently, local supply currently aligns with essential demand, further cooling the need for imports. Additionally, tight supply and rising prices in the local polypropylene market have diverted some attention away from the broader polyolefin market. (II) Middle East and Other Asian Regions: Supply Chain Disruptions and Divergent Price Quotes

Geopolitical conflicts in the Middle East continue to disrupt oil and gas production as well as ocean logistics. While these tensions previously drove up global prices for petrochemical feedstocks and polyolefins, the situation has shown no signs of significant easing recently; uncertainties persist regarding regional plant operations and shipping through the Strait of Hormuz, resulting in low circulation efficiency for overseas supplies. Producers in Southeast Asia (e.g., Thailand and Vietnam) enjoy a price advantage and continue to capture market share in South Asia—including India—reshaping regional supply flow patterns.

Overall, the global PE supply landscape is characterized by "Middle East disruptions, Southeast Asian volume growth, and an Indian 'wait-and-see' approach." International oil prices have fluctuated due to the back-and-forth nature of geopolitical negotiations, providing periodic cost support for PE; however, overseas end-user demand has not seen explosive growth, leaving overseas market prices under pressure at high levels and trending weaker amidst fluctuations.

II. Domestic PE Spot Prices and Regional Market Trends

Last week, domestic prices for various PE grades saw only narrow fluctuations. Price differentials across regions and grades remained within normal ranges, with no significant unilateral upward or downward trends. As of June 12, the average spot transaction price for mainstream LLDPE ranged from 8,200 to 8,900 RMB/ton. HDPE and LDPE prices varied slightly based on application scenarios, with limited room for price negotiation on actual orders for film-grade and injection-molding-grade materials.

Regionally, North China—a key production and consumption hub—saw mainstream LLDPE quotes of 8,100–8,450 RMB/ton; refinery shipments remained steady, and traders maintained a rapid turnover strategy. The East China market saw high supply circulation volumes with prices ranging from 8,280 to 9,100 RMB/ton, slightly elevated due to local logistics and export demand. South China, benefiting from proximity to Southeast Asia, experienced stable arrival volumes with mainstream quotes of 8,400–9,100 RMB/ton, tracking minor fluctuations in overseas markets. Regional markets showed strong interconnectedness with no localized sharp spikes or drops; downstream procurement remained cautious, and high-priced transactions faced resistance. III. Domestic Production Capacity, Output, and Plant Operating Rates

Last week, maintenance at domestic polyethylene (PE) plants gradually wound down, and previously idled units restarted successively; while industry operating rates fluctuated slightly, overall supply steadily rebounded. Due to short-term maintenance at some facilities, the weekly composite operating rate remained within the 74%–78% range. Weekly output saw a corresponding slight increase, leading to a trend of looser domestic supply.

Regarding capacity structure, oil-based and coal-based PE plants operated stably, with no plans for large-scale permanent shutdowns. Based on annual plans, new domestic PE capacity is coming online in an orderly manner, ensuring ample long-term supply capability. Disruptions to Middle East shipping kept import volumes from the region low last week; this weak import replenishment partially offset the increase in domestic output, resulting in relatively limited growth in total domestic supply.

IV. Port and Enterprise Inventory Levels

Last week, domestic PE inventories showed a divergent pattern: a slight rise in producer inventories alongside destocking in social and port inventories. Producers saw a modest accumulation of finished goods due to rising output and slower shipments, though levels remained within a reasonable range with no risk of severe overstocking.

Traders and downstream enterprises maintained low-inventory strategies, leading to continued slight destocking in social inventories; meanwhile, import inventories at major coastal ports declined due to low arrival volumes from the Middle East. Overall inventory pressure remained manageable—neither creating a drag on prices nor driving price hikes through supply tightness—resulting in a neutral impact on market trends.

V. Domestic Demand Performance

Last week, the domestic PE market officially entered the traditional summer off-season. Downstream operating rates remained low, with insufficient support from essential demand. The agricultural film sector entered its wind-down phase, seeing a sharp drop in orders. Operating rates in key downstream sectors—such as packaging film, injection molding, and piping—remained lackluster. With high inventories of finished goods, enterprises limited themselves to essential daily procurement, with a complete absence of large-scale restocking.

Among specific segments, demand for packaging products remained relatively resilient but was insufficient to alter the overall off-season trend. Downstream manufacturers faced weak profitability and low tolerance for raw material price hikes; any upward movement in prices tended to further compress procurement volumes, thereby limiting the potential for PE price increases from the demand side. VI. Import/Export Dynamics and Domestic-International Market Interplay

Import and export patterns remain consistent with the previous period: Disruptions to logistics in the Middle East have caused a continued contraction in domestic PE imports from the region, keeping total import volumes at year-to-date lows. Meanwhile, leveraging price and supply chain advantages, domestic PE continues to be exported to regions like Southeast Asia; while exports serve as a supplementary channel to absorb excess capacity, the limited volume is insufficient to fully alleviate domestic supply pressure.

Domestic and international market trends are closely linked: Fluctuations and declines in international PE prices, combined with cooling procurement in markets like India, have indirectly dampened expectations for domestic exports. Conversely, cost support from crude oil and ethylene—driven by Middle Eastern geopolitical factors—has prevented a sharp drop in domestic prices. With these internal and external factors counterbalancing each other, domestic PE prices have ultimately settled into a range-bound fluctuation pattern.

VII. Upstream-Downstream Price Interplay

Upstream, international oil prices have fluctuated repeatedly due to US-Iran negotiations and the situation in the Middle East, generally remaining at high levels. Ethylene feedstock prices have remained similarly firm, establishing a price floor for polyethylene and limiting the potential for a significant decline. However, the lack of sustained upward momentum in feedstock costs has also prevented PE prices from breaking out to the upside.

Downstream, product prices have remained stable, constrained by the off-season for end-user consumption, preventing the pass-through of changes in feedstock costs. The industry chain is characterized by a cost floor provided by the upstream sector, ample supply in the midstream, and weak demand in the downstream. With poor price transmission, profits across the chain are concentrated at the upstream end, leaving midstream processing enterprises with meager margins.

VIII. Market Outlook

In international markets, India's tariff policies and the rupee exchange rate will continue to dictate local procurement sentiment; a "wait-and-see" attitude is unlikely to lift in the short term, and Asian export markets will likely continue their trend of weak, fluctuating performance. Domestically, PE prices are expected to remain range-bound. On the supply side, plant operating rates are steadily recovering while import growth remains limited, resulting in generally ample supply. On the demand side, the off-season persists, leading to cautious procurement by downstream buyers. Combined with cost support from crude oil, the potential for price movement in either direction is limited, and the prevailing price range is expected to remain stable.

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