SunSirs: Polyethylene Prices Continued to Fall; Will They Approach the "Rock-Bottom" Levels of 2020?

Entering 2025, the polyethylene market continues to plumb the depths of supply-demand imbalance. Current mainstream prices are approaching the extreme lows seen during the initial stages of the 2020 pandemic, and market sentiment is at rock bottom. However, unlike the "black swan" shock four years ago, this downturn is driven by profound changes in industrial structure and macroeconomic logic. The price "retest" of the pandemic lows is not simply a historical repetition, but rather the market searching for a price equilibrium point in a new, more competitive balance. On December 19, 2025, the price of LDPE general film in the North China market hit 8,000 RMB/ton, and LLDPE prices approached 6,300 RMB/ton, but there were still no signs of a bottoming out.

In March-April 2020, the global pandemic outbreak caused polyethylene market demand to freeze instantly, reaching a historical low. The panic at the time stemmed from the "unknown nature of the pandemic." Once the pandemic was brought under control, demand showed a V-shaped rebound. However, in 2025, the continued decline in prices is due to the long-term contradiction of continuously expanding supply and weak demand growth, making the prospect of a "rebound" even more unlikely.

After 2020, domestic polyethylene capacity expansion entered the fast lane, with an annual capacity growth rate of over 18% in 2020-2021.  The pace of expansion slowed down in 2022-2023, followed by an 11% increase in domestic capacity in 2024 and a 16% increase in 2025. The COVID-19 pandemic caused global logistics disruptions and temporary factory closures, resulting in a passive and temporary reduction in supply. In 2025, the commissioning of wholly-owned projects by foreign giants such as ExxonMobil and BASF in China, as well as large-scale domestic integrated refining and chemical projects, will represent an active and permanent increase in supply. 

Currently, polyethylene capacity expansion is continuing, with the capacity increase in 2026 expected to be higher than in 2025. The phasing out of older capacity will take a relatively long time. During this period of rapid capacity growth, the price floor needs further confirmation.

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