SunSirs: Supply Chains Reshaped to Rewrite Polyethylene Market

Entering March, the polyethylene market has experienced a rare surge. Geopolitical risks have quickly spread to the industrial chain, and market sentiment has been released in a concentrated manner in a short period of time, driving the price index to rise unilaterally. As of March 6 (Friday), JLC PE Price Index closed at 8740, a significant increase of 1231 points compared with the end of the previous period. Among them, the high-pressure varieties performed particularly eye-catching, with the index leading the gains, followed by linear and low-pressure varieties. Specifically, JLC LDPE Price Index was 10417, up 1797 from the end of the previous period; LLDPE Price Index was 7709, up 1042 from the end of the previous period; HDPE Price Index closed at 7894, up 876 from the end of the previous period. From the perspective of market trading rhythm, in the first half of the week, stimulated by sudden news, traders' panic replenishment demand was released in a concentrated manner, and transactions were active; as prices climbed to a relatively high level, downstream factories turned to cautious wait-and-see in the second half of the week, and actual transactions of high-priced resources slowed down somewhat.

The core trigger of this round of market rally lies in the sudden escalation of geopolitical tensions in the Middle East. After the U.S.-Iran conflict intensified on February 28, shipping through the Strait of Hormuz was disrupted, directly threatening the stability of China's polyethylene import supply. The Middle East is the most important source of polyethylene imports for China. According to 2025 data from China Customs, supplies from the Middle East account for nearly 50% of China's total PE imports, among which Iran is the fourth largest source of PE imports (accounting for approximately 8.39%), and the proportion of high-pressure (LDPE) products in its exports to China is relatively high. Given that China's overall import dependence on high-pressure products is close to 50%, the impact of this round of supply disruption on the LDPE market is the most obvious.

While external supply faces uncertainties, domestic supply has also shown signs of tightening. Affected by fluctuations in production profits and raw material prices, some manufacturers reduced their operating rates or shut down as scheduled this week, leading to a decline in the overall operating rate of the industry. It is reported that several cracking units, including those of CNOOC Shell, Fujian Refining & Petrochemical, Maoming Petrochemical, Zhejiang Petrochemical, and Sinochem Quanzhou, have reduced their load or even shut down. Although some have not directly affected polyethylene production lines for the time being, against the backdrop of the continued impact of geopolitical factors, it is expected that domestic polyethylene supply will remain relatively tight in the near future.

Furthermore, supply disruptions in the Middle East are triggering profound adjustments in the global polyethylene trade flows. As the world's two major polyethylene export regions, the Middle East and North America, changes in their supply patterns are reshaping the global trade landscape. On one hand, the obstruction of resources in the Middle East has benefited producers in other regions. U.S. producers, leveraging their advantage of low - cost ethane feedstock, have gained significant pricing power amid this supply crisis and are expected to benefit from improved profit margins driven by tight global supply. On the other hand, China's polyethylene exports are facing a historic opportunity. Affected by the obstructed outflow of resources from the Middle East, markets such as Latin America and Europe that originally relied on supplies from this region are actively seeking alternative sources, driving growth in demand for Chinese polyethylene in some overseas markets. Against this backdrop, domestic polyethylene export volumes have increased significantly recently. Market sources indicate that the export price of linear low - density polyethylene (LLDPE) from a petrochemical enterprise in East China this week is $1,030 per ton.

Of course, geopolitical conflicts not only directly impact the chemical product supply chain but also provide strong support on the cost side. International oil prices rose sharply during this period, significantly pushing up the production cost of polyethylene. At the same time, logistics and transportation costs increased synchronously, further strengthening the bottoming effect on the cost side and making the current prices highly resistant to declines. Looking at the trend, the market is likely to maintain a relatively strong oscillation in the short term. On the one hand, the geopolitical factors that triggered the market movement are difficult to subside in the short term, the expectation of tight imported resources persists, and the overall market sentiment remains firm. On the other hand, tight domestic supply, increased exports, and improving seasonal demand also provide support for the market. However, after the rapid rise this week, market prices have reached a phased high. The cost transmission for downstream factories takes time, and the resistance to high - priced raw materials is gradually increasing, which may limit the room for further upward movement. It is recommended to continue to pay attention to the actual transaction situation after the new downstream prices are reached to judge the follow - up demand momentum.

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