SunSirs: China Polyethylene Rises Then Falls, Fluctuating at High Levels

Recently, the polyethylene market has exhibited a pattern of high-level fluctuation—strengthening initially before weakening. According to monitoring data from SunSirs: The average price of LLDPE (7042) stood at 8,880 RMB/ton on April 6th and 8,848 RMB/ton on April 10th, marking a decline of 0.36%. The average price of LDPE (2426H) was 11,650 RMB/ton on April 6th and 11,883 RMB/ton on April 10th, an increase of 2.00%. The average price of HDPE (5000S) was 10,262 RMB/ton on April 6th and 10,487 RMB/ton on April 10th, an increase of 2.19%.

Strong Support from the Cost Side: Geopolitical conflicts in the Middle East continue to escalate, keeping international crude oil prices at elevated levels. Production margins for oil-based PE remain in the red, compelling domestic petrochemical enterprises to collectively reduce operating loads and undertake spring maintenance. This has created strong expectations of a supply-side contraction, thereby fueling bullish sentiment in the market.

Structural Contraction on the Supply Side: There have been no new production startups; instead, spring maintenance shutdowns are concentrated, leading to a decline in overall output. Supplies from the Middle East have dwindled, and cargo arrivals at ports remain low. As of early April, social inventories of polyethylene stood at 623,200 tons—a slight month-on-month increase. These relatively high inventory levels are currently capping the upside potential for prices.

Persistent Weakness on the Demand Side: The peak season for agricultural films is drawing to a close, while downstream orders across sectors such as packaging, injection molding, and piping remain lackluster. Market participants harbor strong resistance to high prices, shifting their procurement strategies to a "buy-as-needed, focus-on-essential-demand" approach; consequently, trading activity at high price points has lost momentum. As LLDPE is primarily used in agricultural films, it is the most directly impacted by the conclusion of the peak season; thus, it faces the most pronounced bearish pressure from the demand side, resulting in the largest price pullback after its initial surge.

The polyethylene market is expected to continue fluctuating at high levels amidst a tug-of-war between bullish and bearish forces. While cost-side factors provide a price floor, weak demand acts as a drag on the market. The short-term trend remains bullish, though market participants should remain vigilant regarding potential price corrections.

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