SunSirs: China PE Market Strengthened in 2024 and Prospects for 2025

According to the analysis system monitoring of SunSirs, it can be seen that PE will show a relatively strong trend of oscillation in 2024, with high-pressure products experiencing a large increase, followed by linear products, and low-pressure products showing a relatively weak trend. There were two sustained increases throughout the year, the first in April and the second in October. In 2024, LDPE increased by 16.16%, LLDPE increased by 8.31%, and HDPE increased by 1.03%.

Take a rough look at the rising stage in 2024

The first price increase: from April to June. In the second quarter, the petrochemical equipment is in a period of centralized maintenance, with an overall decrease in load and an expected reduction in PE supply. The supply pressure is not high, and the supply-demand situation has improved; In addition, with favorable macro policies and the strengthening of plastic futures, prices continue to rise.

Second Rise: October December: The overall trend of PE in October was strong, with a significant increase occurring after the National Day holiday. Due to the tense situation in the Middle East, the crude oil market rose, and after the holiday, the PE market was boosted by favorable conditions, resulting in a significant price increase. The demand for agricultural film in October has entered the peak season, and there are positive expectations from the consumer side. On the supply side, there has been an increase in maintenance equipment, and there has been a general delay in the production of new planned equipment. The operation of new production capacity is not smooth, resulting in a reduction in supply. Inventory remains at a low level, especially for linear products with tight supply sources. The supply pressure is not significant, and prices remain strong. Positive domestic policies have been released, and the market sentiment is good, providing support for the PE market.

Forecast for 2025

Capacity: In recent years, the domestic PE production capacity has maintained a growth trend. The 23.46 million tons in 2020 increased to 35.71 million tons in 2024, a year-on-year growth of 10.18%. It is expected that 7.43 million tons of PE will be put into production in 2025. The production capacity in the first quarter is relatively concentrated, with about 3.03 million tons of PE plants planned to be put into operation. The production capacity is still in a high-speed growth stage.

Production: The expected PE production in 2024 is 27.914 million tons, a year-on-year decrease of 0.57%, due to an increase in equipment maintenance losses. The production forecast for the first quarter of 2025 is expected to be between 2.42-2.48 million tons of PE due to the gradual restart of equipment maintenance and inspection in January, as well as the gradual increase in new production capacity. Due to the Spring Festival holiday in February and the temporary parking of the equipment, it is expected to be between 2.3 and 2.4 million tons. In March, with the recovery of downstream demand, it is expected to be between 2.4-2.5 million tons.

Maintenance losses: The maintenance losses of PE plants will significantly increase in 2024, with an estimated loss of 4.7334 million tons, a year-on-year increase of 40.93%, setting a new historical high. It is expected that there will be fewer maintenance facilities in the first quarter of 2025, with a production capacity of only 1.69 million tons.

Import volume: From January to November 2024, the total import volume of PE was 12.5806 million tons, with a year-on-year increase of 2.51%. Among them, the import quantity of LDPE was 2.648 million tons, a year-on-year decrease of 5.99%; The import quantity of LLDPE was 4.7518 million tons, a slight decrease of 0.04% year-on-year; The import quantity of HDPE was 5.1745 million tons, with a year-on-year increase of 10.05%. The increase in domestic production of LDPE and LLDPE has led to a decrease in some imports, while the increase in HDPE imports is mainly due to a decrease in domestic production.

Export volume: From January to November 2024, the total export volume of PE was 763,600 tons, a year-on-year decrease of 1.89%. Among them, the export volume of LDPE was 227,200 tons, a year-on-year increase of 3.46%; The export volume of LLDPE was 157,600 tons, with a growth rate of 9.98%; The export volume of HDPE decreased by 36,700 tons, a decrease of 8.84%.

Apparent consumption: As of November 2024, the total apparent consumption of PE in China was 37.1155 million tons, with a year-on-year increase of 2.20%. Among them, the apparent consumption of LDPE has slightly decreased, with an apparent consumption of 5.2765 million tons, a year-on-year decrease of 0.24%. Due to the significant increase in domestic LDPE prices compared to LLDPE and HDPE in 2024, the price difference with LLDPE has widened, and the apparent consumption of LDPE has slightly decreased.

PE downstream operating rate: In 2024, the comprehensive operating rate of PE downstream remained below 50% for a long time, and the overall operating load was lower than in previous years. In December, the downstream plastic production rate in China was 44%, a decrease of 2 percentage points compared to the previous month. Among them, the overall operating rate of agricultural film was 38%, a decrease of 3 percentage points compared to the previous period. The overall operating rate is expected to decline by around 6 percentage points in January 2025.

On the cost side: In 2024, under the influence of geopolitical, macro, and supply and demand fundamentals, international crude oil will emerge from a trend of rising and falling, gradually fluctuating and narrowing, and oil prices will gradually return to fundamentals. The supply-demand balance in 2025 will transition from a tight equilibrium state to a balanced state, and major institutions are relatively pessimistic and conservative about oil prices in 2025. Therefore, the upward range of oil prices will be suppressed.

Market forecast: PE production capacity will still be in a high-speed growth stage by 2025, coupled with the delay in the new production of PE plants in December 2024. With the gradual increase in production capacity, there will be greater pressure on the supply side; The downstream demand growth rate will be lower than the supply growth rate, and the expected intensification of the supply-demand game. The main production of new devices is concentrated in the first half of the year, with significant pressure on the supply side. The demand for PE in 2025 still faces challenges, and attention needs to be paid to the issuance and implementation of domestic macro stimulus policies as well as the overseas economic situation. It is expected that the market will weaken in the first half of the year and may rebound in the second half.

If you have any enquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.