SunSirs: Supply-Demand Divergence Leads to Volatility at High Levels in the Polyethylene (PE) Market

In mid-April 2026, the polyethylene market exhibited the core characteristics of “initial gains followed by declines, volatility at high levels, and divergence among product grades,” driven by a confluence of factors including easing geopolitical tensions, weakening cost support, concentrated supply maintenance, and sluggish demand during the off-season. The one-sided upward trend since March has temporarily paused, and the market has entered a phase of tug-of-war between bulls and bears. HDPE stood out as the sole bright spot due to strong supply and demand fundamentals, while LLDPE and LDPE came under pressure and weakened as costs retreated. Combining SunSirs’ latest benchmark prices as of April 14 with data from early April and early March, the price transmission across the entire industry chain and the logic behind price fluctuations are clearly illustrated.

I. Price Trends: Structural Divergence, with HDPE leading the Way

According to Business Society’s monitoring, the benchmark prices and price changes for the three core polyethylene grades on April 14, early April, and early March are as follows:

• LLDPE (Linear Low-Density Polyethylene): SunSirs benchmark price on April 14 was 8,858.33 RMB/ton, up 1.05% from early April (8,766.67 RMB/ton) and up 11.42% from early March (7,950 RMB/ton)

• HDPE (High-Density): SunSirs benchmark price on April 14 was 10,462.50 RMB/ton, up 3.21% from early April (10,137.50 RMB/ton) and up 16.57% from early March (8,975 RMB/ton)

• LDPE (Low-Density): The SunSirs benchmark price on April 14 was 11,833.33 RMB/ton, up 3.05% from the beginning of April (11,483.33 RMB/ton) and up 11.11% from the beginning of March (10,650 RMB/ton)

Key Characteristics: In March, all grades surged significantly driven by geopolitical tensions; in April, prices peaked before retreating and consolidating at elevated levels. HDPE led the gains by a wide margin, while LLDPE and LDPE showed weaker performance, resulting in a clear structural divergence in the market.

II. Cost Side: Geopolitical Premium Fades, Cost Support from Oil-Based Production Rapidly Weakens

As a downstream derivative of crude oil, polyethylene prices are highly correlated with crude oil and ethylene. The cost side was the key driver behind the market turnaround in April.

Crude Oil: On April 14, Brent crude stood at $98.50 per barrel, a sharp drop of 12.05% from early April ($112 per barrel), as the easing of geopolitical tensions led to a concentrated unwinding of previous risk premiums. However, it remained 15.88% higher than early March ($85 per barrel), providing bottom support for polyethylene prices.

Ethylene: Domestic ethylene (East China spot, around April 14, 2026) was priced at 9,700–10,000 RMB/ton (Sinopec East China listed price / market negotiation), while the international CFR Northeast Asia price was $1,450/ton (equivalent to approximately 10,300–10,500 RMB/ton).

As a direct feedstock, profits for oil-based polyethylene have contracted significantly, with some facilities operating at a loss, forcing companies to reduce production and conduct maintenance.

Cost Pass-Through: In March, the pattern was “crude oil surge → ethylene price hike → PE follows suit”; in April, it shifted to “crude oil plunge → ethylene weakens → PE retreats from highs,” with the cost side transitioning from strong support to marginal bearish pressure.

III. Supply Side: Spring Maintenance Peak + Tightened Imports, Marginal Supply Contraction

In April, the domestic polyethylene market entered the peak season for spring maintenance. Coupled with disruptions to imports from the Middle East, tight supply provided strong support for prices.

Domestic Maintenance: As of April 14, the domestic PE capacity utilization rate had dropped to 69.42%, a decline of 9 percentage points from the March average (78.43%). The estimated production loss due to maintenance in April is 729,900 metric tons, a 44.96% increase month-on-month and a 96.74% increase year-on-year. With HDPE facilities undergoing concentrated maintenance, the contraction in supply is most pronounced for this grade, serving as the primary driver of its strength.

Import Sources: The Middle East accounts for over 40% of China’s PE imports; geopolitical conflicts have disrupted shipping and caused delays in port arrivals. April import volumes fell by 15%–20% month-on-month. With higher reliance on HDPE imports and a significant price inversion between domestic and international markets, importers’ willingness to take delivery was extremely low, further tightening spot supply.

Inventory Levels: Domestic enterprise inventories were neutral to slightly low, while social inventories stood at 623,200 metric tons, a slight month-on-month increase. Amid high prices, downstream players remained cautious about restocking, limiting the upward pressure on prices from inventory levels.

IV. Demand Side: End of Peak Season + Price Deterrence; Weak Demand Driven by Essential Needs

The primary downstream sectors for polyethylene include agricultural film, packaging film, pipes, and hollow products. The traditional peak season concluded in April.

IV. Demand Side: End of Peak Season + Price Hikes Dampen Demand; Essential Needs Dominate but Remain Weak

The primary downstream sectors for polyethylene include agricultural film, packaging film, pipe materials, and hollow products. As the traditional peak season came to a close in April, overall demand remained weak, with insufficient capacity to absorb high prices.

Agricultural Film (Major LLDPE Downstream Application): The use of ground cover and greenhouse films in northern regions is winding down, with operating rates dropping to 45% month-on-month and orders plummeting; LLDPE demand has weakened most noticeably.

Packaging / Injection Molding (General-Purpose Downstream Applications): Packaging film operating rates stood at 47.52%, with orders for daily necessities and food packaging remaining sluggish, driven primarily by essential purchases.

Pipe/Hollow Molding (HDPE’s Main Downstream Sector): HDPE’s downstream pipe and hollow molding sectors are experiencing a seasonal rebound, with operating rates rising slightly, providing strong demand support for HDPE.

Demand: High raw material prices are squeezing downstream margins, making it difficult for manufacturers to raise product prices. Companies are “avoiding high prices and seeking lower ones,” with procurement primarily consisting of small, short-term, and just-in-time orders, resulting in sluggish market transactions.

Short-term Outlook: Weak consolidation while searching for a bottom; continued divergence among grades

Core Logic: Driven by receding costs and the off-season for demand, with plant maintenance providing support at the bottom; the market is retreating from highs and consolidating within a narrow range.

LLDPE: Off-season for agricultural film and cost pressures are weighing on prices, which are trading weakly within the range of 8,600–8,900 RMB/ton.

HDPE: Strongest support from tight supply and demand; limited downside, range: 10,200–10,600 RMB/ton

LDPE: Cost declines + subdued demand; consolidating at high levels, range: 11,500–11,900 RMB/ton.

Key Risks: Unstable Middle East tensions, a rebound in crude oil prices, and concentrated restocking by downstream sectors could trigger short-term rebounds, but these are unlikely to alter the overall bearish trend.

Overall, the polyethylene market in the second quarter of 2026 is expected to follow a pattern of “weakness followed by stabilization, with divergence among grades,” gradually shifting toward a more relaxed and bearish environment. The market will transition from price-setting driven by sentiment at high levels back to pricing based on supply and demand fundamentals.

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