China PE Capacity Expansion
Introduction: China’s PE capacity is expected to exceed 45,000kt/a by 2026, intensifying competition in the general-purpose segment. New capacity may be dominated by FDPE units, with naphtha being the main feedstock while light ends gain share. Northwest China and East China will remain the key regions for capacity expansion. Producers are focusing on flexible product switching to adapt to market dynamics, driving industry competition toward high-end, differentiated products.
New Capacity to Flood the Market, Risk of Supply Surplus
As the world’s largest PE consumer, China will continue to be the core growth region for new capacity. The rollout of private refining-chemical integration projects and light ends utilization initiatives will add significant PE capacity. From October 2025 to 2026, China’s planned and under-construction PE capacity is estimated at 9,550kt/a. With current domestic capacity at 37,428kt/a, the total PE capacity is expected to exceed 45,000kt/a, shifting the market from “tight balance” to “loose balance” or even temporary “supply surplus”. Competition among producers will intensify, particularly in the general-purpose market, potentially squeezing the gross profit of the industry.
If the planned units come online as scheduled, China’s reliance on imports will further decline, altering traditional trade flow. Middle Eastern and North American exporters will need to seek new markets, with Southeast and South Asia emerging as increasingly critical demand hubs. While general-purpose material supply pressure rises, the supply of high-end PE products (e.g., mPE, UHMWPE) will remain relatively tight due to technical barriers, offering higher gross profits. Future competition will shift from sheer “volume” to “quality”, favoring producers with core technologies and the ability to deliver high-performance, differentiated products.
Unlike traditional units designed for specific PE density ranges, full-density PE units can switch between HDPE and LLDPE production. Leading technologies include Univation’s Unipol PE and Ineos’s Innovene G processes, enabling rapid product transitions to maximize utilization and economic returns.
New capacity will prioritize FDPE units (3,850kt/a), with LDPE units also planning EVA production (1,550kt/a), reflecting industry efforts to adapt to market volatility. By feedstock, naphtha-based PE capacity will dominate (5,100kt/a), followed by coal-based PE (950kt/a) and PE based on light ends (3,500kt/a), with the latter’s share rising. Regionally, Northwest China will lead capacity additions (3,000kt/a), followed by East China (2,400kt/a), North China (1,800kt/a), and South China (1,700kt/a).
Market uncertainties and commissioning delays may affect timelines, and SCI will continue monitoring project progress.
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