Polyethylene market will weaken consolidation
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The domestic polyethylene market remains stable amid tight supply from manufacturers, but rising prices are causing concern among downstream buyers. With crude oil prices under pressure and limited demand from end-users, the overall market sentiment is turning cautious. Analysts expect a gradual weakening in the polyethylene market in the near future.
In a market where many production units are undergoing maintenance and supply remains constrained, polyethylene prices have remained firm. Some producers continue to raise factory prices, particularly for low-density polyethylene (LDPE). Despite this, there is still some rigid demand, especially for agricultural mulch and high-melt injection applications, which are expected to pick up in November. This supports current price levels, at least for now.
However, the high cost of polyethylene is not easily passed on to downstream sectors. As a result, profit margins for downstream companies are shrinking, leading to lower production enthusiasm and slower shipments. This has created a bottleneck in the distribution chain and limited further price increases.
Currently, ex-factory prices across the industry are mixed, with weak trading volumes observed in the market. While inventory pressures remain low and supply is still limited, the market continues to hold strong. However, this stability is likely to be tested as more supply comes online.
According to recent reports, Fushun Petrochemical’s ethylene plant and its downstream facilities are expected to resume operations in November, signaling an increase in local supply. This development could shake market confidence and put downward pressure on prices. Additionally, the ongoing commercial exploitation of shale oil in the U.S. has led to a surplus of crude oil, with U.S. commercial inventories rising for the seventh consecutive week. This trend has contributed to falling international crude oil prices, reducing cost support for polyethylene.
Taking all these factors into account, the polyethylene market is expected to experience a short-term weakness. Although current prices remain elevated due to supply constraints, the combination of rising supply, weak demand, and falling crude oil prices suggests that a correction may be on the horizon. Buyers are advised to monitor market developments closely in the coming weeks.