PE Prices Poised for Growth amid Easing Supply-Demand Imbalance in H2 2025
Introduction: In H1 2025, China’s PE market prices showed significant divergence across grades. The prominent supply-demand imbalance was a key factor driving price declines for most PE varieties. On the supply front, capacity expansion amplified market pressure. Demand remained subdued, offering limited price support. Looking ahead, the PE market may face a more complex operating environment in H2 2025, with prices expected to trend upwards amid fluctuations.
Divergent Price Movements Persist Across PE Varieties
Different varieties of PE showed markedly varied price movements in H1 2025. LLDPE prices fluctuated downward overall, LDPE prices followed a wavelike decline, while HDPE prices were range-bound. Specifically, the average price of LLDPE in H1 2025 was RMB 7,841/mt, down 6.10% YoY, LDPE prices averaged RMB 9,671/mt, up 0.93% YoY, and the average price of HDPE raffia hit RMB 8,162/mt, down 3.59% YoY.
The supply-demand imbalance was a major factor driving the downward trajectory of PE prices. Many new units, including those at Inner Mongolia Baofeng, ExxonMobil (Huizhou) Chemical and Shandong Yulong, were put into operation in H1 2025, adding to the capacity released from INEOS Sinopec Tianjin’s startup in Q4 2024, which increased domestic supply pressure. However, most downstream industries underperformed, and downstream producers generally had low willingness to stock up. Furthermore, plastic product exporters faced significantly reduced orders due to the U.S.-China tariff tensions, undermining the consumption of PE.
Supply: Mounting Pressure from Expanding Capacity
China’s PE capacity rose by 2,930kt/a in H1 2025 to 37,088kt/a, mainly in North China. Increased supply kept prices in North China at the lowest among China’s three major regions, widening the price spread with East China to RMB 350/mt for LLDPE at one point.
H1 2025 China Newly Added PE Capacity (kt/a)
China’s PE output in H1 2025 totaled 15,351.7kt, up 14.06% YoY. By varieties, the average operating rates of LLDPE and LDPE were 106.04% and 79.68%, respectively, rising by 10.09 and 3.78 percentage points YoY, while the operating rate of HDPE fell by 7.05 percentage points to 61.04%, which contributed to HDPE’s stronger resilience against price declines observed in the first half.
China’s PE import volume is projected at 6,945.3 in H1 2025, a 6.24% increase compared to the same period in 2024, supported by widening domestic-import price gaps and seasonal demand slowdowns in Southeast Asia. However, the U.S. reciprocal tariffs policy and weakening downstream demand curbed importers’ appetite, with June imports expected to decline.
Demand: Lackluster Performance with Few Bright Spots
China’s economy faced internal and external pressure in H1 2025, achieving steady growth amid policy stimulus and recovering domestic demand. Externally, tariffs and weak global demand dragged on exports; internally, structural transitions led to uneven domestic demand recovery, with real estate remaining sluggish. In Q1 2025, GDP grew by 5.3% YoY, and the manufacturing PMI rebounded. In Q2, U.S. tariff disruptions caused manufacturing activity to dip before recovering, showing economic resilience. The GDP is estimated at around 5.2% in Q2. The operating rate in downstream industries of PE followed a rise-then-fall trajectory. In Q1, the operating rate saw an uptick as downstream producers ramped up production to fulfill pre-Chinese New Year holiday orders, with some leveraging exports and re-exports to counter tariffs. However, slowing external demand later dampened operating rate growth. The operating rates of most downstream industries moved downwards in Q2 as demand underperformed amid the traditional slack season and export orders contracted. Most downstream producers purchased feedstock on a need-to basis due to the lack of growth momentum in orders.
Outlook: Prices Likely to Rise Amid Multiple Factors
In H2 2025, the PE market will navigate a more complex landscape, with tariff risks, volatile costs, and structural supply-demand imbalance as key variables.
On the macro level, while U.S.-China tariff tensions had eased temporarily, uncertainties persist. Geopolitical risks, particularly in the Middle East (e.g., Israel-U.S. talks and Red Sea shipping threats), continue to buoy oil prices—PE’s key cost driver—amplifying supply disruption concerns and potentially strengthening cost support.
H2 2025 China PE Capacity Expansion Schedule (kt/a)
Supply: New capacity totaling 2,800kt/a is expected to be put into operation in H2 2025, mainly in Q3, heightening supply pressure, especially for HDPE. However, rising self-sufficiency rate may curb import volume for general-purpose grades, alleviating some pressure.
Demand: The demand may remain sluggish in July, but traditional peak season and e-commerce shopping festivals in Q3 may bolster orders.
Overall, the PE market price may show an upward trend amid fluctuations in H2 2025 before retreating during the slack season at the end of the year.
Risks: Geopolitical tensions; new capacity; macro policy
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