SunSirs: LLDPE: Supply-Demand Imbalance Intensifies as Prices Continue to Weaken

In November, domestic LLDPE prices trended downward while production costs rose across manufacturers, pushing gross margins into losses. With increased supply pressure and further weakening demand in December, the intensifying supply-demand imbalance is likely to drive prices lower.

November Domestic LLDPE Market Review: Weakening Demand Fuels Continued Price Decline

The domestic PE market trended downward overall in November. Crude oil prices fluctuated downward, failing to provide effective cost support for PE. On the demand side, operating rates in most downstream industries showed a declining trend, with weak purchasing intentions from factories adopting a “buy as needed” approach. By the end of November, the monthly average price of LLDPE stood at 7,107 RMB/ton, down 1.61% month-on-month and 17.58% year-on-year.

Upstream: Higher Costs for Oil-Based/Coal-Based Producers, Lower Production Margins

Production costs rose across different feedstock-based manufacturers in November. The average monthly cost for naphtha-based LLDPE film producers increased by CNY 4/ton to CNY 7,063/ton, a 0.06% rise. Domestic coal-based LLDPE film production costs climbed by CNY 319/ton to CNY 7,045/ton, a 4.74% increase.

In November, production costs for both oil-based and coal-based enterprises increased, while domestic LLDPE film material prices declined. As a result, gross margins for both production methods fell into negative territory, pushing enterprises into loss-making situations. Among them, naphtha-based LLDPE film producers recorded an average monthly gross profit of -183 RMB/ton, down 192 RMB/ton from October; coal-based LLDPE film producers averaged -266 RMB/ton, a decline of 458 RMB/ton from October.

Supply: Domestic LLDPE film material supply decreased

According to statistics, China's PE production in November 2025 reached 2.7348 million tons, down 0.51% month-on-month but up 21.57% year-on-year. LLDPE production stood at 1.2583 million tons, declining 2.98% month-on-month.

The domestic PE operating rate in November 2025 stood at 78.66%, up 2.15 percentage points from October and 1.42 percentage points year-on-year. Multiple petrochemical supply units completed maintenance in the first half of the month, and ExxonMobil (Huizhou) LDPE units commenced production, contributing to the overall increase in operating rates. Although domestic petrochemical PE maintenance losses decreased month-on-month in November, the number of production days scheduled for the month was one day fewer than in October. Consequently, domestic PE output saw a slight month-on-month decline.

Demand: Downstream Operating Rates Decline, Insufficient Raw Material Procurement

Downstream operating rates decreased to varying degrees in November. Agricultural film operating rates fell by 4 percentage points to 48%, while packaging operating rates dropped by 1 percentage point to 53%.

Specifically: - Agricultural film demand weakened, with greenhouse film order cycles shorter than previous years. Most factories adjusted operating rates to maintain production continuity. Limited demand for ground film persisted, though some tender orders followed through. Factories maintained high operating rates during certain phases, but the limited volume of tender orders failed to significantly impact overall production. In the packaging sector, following the conclusion of Double Eleven promotions and home appliance subsidy policies, corporate order follow-through has been sluggish, leading to slight declines in production at some facilities. Consequently, companies have adopted a cautious approach to raw material procurement, primarily purchasing on an as-needed basis, which has failed to provide effective support.

Related Downstream Market Analysis: Agricultural Film Industry Sentiment Index Declines, Prices Shift Lower

Agricultural film prices edged lower in November as the market center of gravity continued to shift downward. Demand for agricultural films weakened in November, and greenhouse film order cycles shortened compared to previous years. Consequently, most factories adjusted production loads to maintain continuity. Ground film demand remained limited, with some tender orders being fulfilled. Factories maintained high phased production levels, but the limited volume of tender orders failed to significantly impact overall production capacity utilization. Throughout the month, the raw material PE market fluctuated downward, with prices continuing to shift lower. Cost support for agricultural film remained notably weak. With both demand and costs weakening, agricultural film prices saw a narrow decline. By the end of November, the monthly average price for double-protection film in North China stood at 9,122 RMB/ton, down 1.06% month-on-month and 9.13% year-on-year. The monthly average price for ground film was 8,122 RMB/ton, down 1.19% month-on-month and 10.04% year-on-year.

Overall demand in the agricultural film sector weakened in November, with film manufacturers seeing reduced order volumes. As demand diminished, factory operating rates declined, leading to lower production output. Concurrently, the weak downward trend in raw material markets during the month significantly dampened manufacturers' procurement enthusiasm, keeping inventory levels at relatively low levels.

Domestic LLDPE market prices are expected to continue their downward trajectory.

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