March Polyethylene Prices Surge Over 30% Across China

March 30 News: Curve Comparison Chart

In March, all polyethylene varieties followed a market pattern characterized by “continuous price increases + phased corrections + renewed surges to new highs.” According to monitoring data: For LLDPE (7042), the average price rose from 6,616 CNY/ton on March 1 to 9,016 CNY/ton on March 30, representing an increase of 36.27%. For LDPE (2426H), the average price climbed from 8,633 CNY/ton on March 1 to 11,416 CNY/ton on March 30, up 32.24%. For HDPE (5000S), the average price rose from 7,317 CNY/ton on March 1 to 9,987 CNY/ton on March 30, an increase of 36.49%.

Core drivers of market trends: The surge in costs triggered by geopolitical conflicts, coupled with the anticipated contraction in supply, are resonating together. Among these, cost increases serve as the direct driving force, while supply constraints provide strong support.

Cost side: The sharp surge in crude oil prices has triggered a market rally, and cost pressures are rising steadily.

Crude oil prices surge: In early March, the situation in the Middle East escalated, disrupting shipping through the Strait of Hormuz and sending international oil prices soaring. This directly drove up the raw material costs for polyethylene. The strong cost support became the primary driving force behind the market’s upward momentum. Production costs for China’s oil-based PE producers have risen sharply, prompting companies to raise their factory prices accordingly and spurring a corresponding rise in the spot market.

Supply side: Both domestic and international supply are contracting, exacerbating the mismatch between market supply and demand.

Import sources are being hampered: The Middle East accounts for nearly 50% of China's polyethylene imports. With rising shipping risks in the Strait of Hormuz, the pace at which Middle Eastern supplies arrive at ports is directly affected, and the anticipated tight supply situation is driving polyethylene prices higher.

Chinese facility load reductions/shutdowns: Some PE facilities in China have reduced loads or shut down due to raw material issues. The substantial reduction in supply further reinforces the logic for price increases.

Inventory at low levels: Supply contraction combined with traders' reluctance to sell has led to a continuous reduction in social inventory. In a low-inventory environment, the market's ability to absorb price increases is stronger.

Demand side: Temporarily weak, but not yet exerting significant downward pressure.

March is traditionally a low-demand season, with slower recovery in operating rates for downstream agricultural film and packaging companies. However, under the backdrop of soaring costs and supply contraction, the impact on the demand side has been weakened. The market is more focused on the expected shortage in supply, so the weak demand has not changed the upward trend.

In the short term, the core logic supporting this month's market performance in China has not completely dissipated. The market is likely to maintain a high-level fluctuation pattern, but there is a need to be cautious of the risk of a pullback.

Supportive factors remain in place: The situation in the Middle East has yet to ease, expectations of supply contraction persist, and April’s PE import arrivals are expected to decline, meaning supply-side support continues.

Accumulating downside risks: After prices have risen sharply, downstream enterprises continue to show weak purchasing intentions, and high-priced transactions face increasing resistance. Should supply subsequently recover or oil prices correct downward, the market could experience a temporary pullback.