​July Plastic Market Conditions and August Opportunity Forecast

July Plastic Market Conditions and August Opportunity Forecast

In July 2025, under the combined influence of a volatile macroeconomic environment and adjustments to the industry's supply-demand structure, the domestic plastic market overall showed a weak performance. The prices of major plastic varieties fluctuated significantly, with supply-demand contradictions becoming increasingly pronounced. Weak downstream demand emerged as the primary factor restricting market growth. As flame retardant manufacturers closely linked to the plastic industry, we have keenly felt the ripple effects of these market changes, facing pressure from the demand side while seeking new development opportunities amidst industry adjustments. The following provides a detailed review and analysis of the July plastic market conditions, along with a forecast for August market trends.

July-August 2025 Plastic Market Analysis

I. July Plastic Market Review

1. Polyethylene (PE)

• Low-Density Polyethylene (LDPE): In July, the LDPE market experienced a significant increase in supply, with prices continuing to decline. By the end of the month, the mainstream price range for general film-grade material was 10,150-12,200 yuan/ton. For example, the price of Shanghai Petrochemical's Q281 grade dropped to 10,200 yuan, a monthly decrease of 750 yuan; N220 was quoted at 10,900 yuan, down 300 yuan; and Daqing Petrochemical's 2426H grade was quoted at 10,150 yuan, a decrease of 650 yuan. The earlier price increases were fully absorbed this month. As maintenance facilities gradually resumed operations, market supply pressure surged. Petrochemical enterprises, in an effort to boost sales, had no choice but to adopt price-cutting strategies, causing market prices to continuously decline. However, the key factor constraining the market is demand, as downstream manufacturers showed minimal enthusiasm for procurement, leaving the market lacking upward momentum. Traders, lacking confidence in the market outlook, generally sold at low prices to facilitate transactions.

• Linear Low-Density Polyethylene (LLDPE): The market performed poorly, with prices declining throughout July. By the end of the month, the main quotes were in the range of 8,350–8,900 yuan. Petrochemical enterprises continued to lower their ex-factory prices to alleviate inventory pressure, driving the market downward. Traders, to mitigate risks, mostly followed suit by reducing prices. However, downstream manufacturers showed little interest in purchasing, intensifying the bearish market sentiment.

• High-Density Polyethylene (HDPE): The HDPE market saw extremely sluggish transactions this month, with prices continuing to decline. In the first half of the month, despite the lack of improvement in weak demand, the support of comprehensive costs to some extent limited the extent of price declines. In the latter half of the month, some petrochemical enterprises reduced prices to promote sales due to shipping difficulties, further exacerbating the pessimistic market sentiment. Traders, shaken in confidence, mostly sold at low prices to reduce inventory pressure.

2. Polypropylene (PP)

The polypropylene market remained lackluster in July, with prices fluctuating within a narrow range. By the end of the month, the mainstream quoted prices for homopolymer filament/injection molding grades were between 7,750 and 8,600 yuan. The market has been in a prolonged stalemate. Although supply levels were relatively moderate, and petrochemical enterprises occasionally raised their ex-factory prices during the period, downstream manufacturers only maintained procurement based on demand, with extremely low restocking intentions, making it difficult for demand to be effectively released. Traders felt uncertain about the future market development and primarily focused on securing transactions to mitigate risks.

3. Polyvinyl Chloride (PVC)

Downstream users adopted a slow pace of procurement, leading to persistently high social inventories. Additionally, futures prices plummeted, leaving the spot market deeply entrenched in weakness. Traders adopted a more cautious mindset, with frequent instances of price concessions in actual transactions. However, these measures had minimal impact on boosting market sentiment. By July, domestic calcium carbide-based PVC producers faced average losses of 520 yuan/ton, with severe loss-making conditions. Although previously, due to high profits in the caustic soda sector, the industry operated under a "alkali-supporting-chlorine" strategy, resulting in a slow decline in PVC production capacity utilization and persistent supply pressure, recent declines in domestic caustic soda production profits—with unit profits decreasing by 120 yuan/ton to 380 yuan/ton—have brought domestic chlor-alkali integration operations to near breakeven levels. This suggests a potential decline in PVC production capacity utilization moving forward. From inventory data, as of now, domestic PVC social inventory stands at 575,200 tons, up 1.03% month-on-month but down 38.06% year-on-year. Among these, PVC social inventory in the East China region is 523,700 tons, up 1.02% month-on-month but down 39.84% year-on-year; in the South China region, inventory stands at 51,500 tons, up 1.10% month-on-month and down 11.22% year-on-year. Domestic PVC producer inventory is approximately 460,000 tons, an increase of about 100,000 tons compared to the same period last year, indicating significant inventory reduction pressure for enterprises.

4. Polystyrene (PS)

The market resumed its downward trend in July, with the decline continuing to widen. Although styrene monomer prices remain high, their impact on market conditions is limited. Downstream manufacturers have shown minimal enthusiasm for purchasing, instead waiting for prices to fall further, leading to difficulties in effectively increasing transactions. The actions of some petrochemical enterprises to reduce their ex-factory prices have also had a negative impact on market participants' sentiment. Traders are pessimistic and are primarily relying on discounts and promotions to move inventory.

5. ABS Resin

At the beginning of the month, the market remained stable with slight increases due to high costs and downstream production controls. Manufacturers generally maintained their prices, and although traders faced difficulties in selling their inventory, they did not offer significant discounts. By the end of the month, ABS profits began to recover, and some petrochemical enterprises increased their production capacity, leading to an expected increase in market supply and significant pressure on prices. Market participants are in a poor mood and are actively selling to reduce inventory. In July, the domestic ABS industry's production capacity utilization rate slightly decreased, with the overall utilization rate adjusted from 66% at the end of last month to approximately 65%, but the weekly average production remained stable above 120,000 tons, and petrochemical enterprises' finished product inventory remained at a high level above 210,000 tons.

II. Analysis from the Perspective of Flame Retardant Manufacturers

As flame retardant manufacturers, fluctuations in the plastic market have multifaceted impacts on our business. In the polyethylene sector, the decline in LDPE, LLDPE, and HDPE prices means that production costs for downstream plastic product manufacturers have decreased. Theoretically, this could stimulate them to expand production scale and thereby increase demand for flame retardants. However, in reality, due to weak terminal market demand, plastic product manufacturers, despite lower costs, dare not expand production and remain cautious in their procurement of flame retardants. In the polypropylene market, the stagnant and fluctuating market conditions have made plastic product manufacturers more cautious in their raw material procurement, resulting in relatively stable procurement volumes of flame retardants, with little potential for significant growth. In the polyvinyl chloride (PVC) market, the industry's high loss rate and weak supply-demand dynamics have put significant pressure on both PVC producers and downstream product manufacturers. Some companies may reduce costs to maintain operations, which could include decreasing the use of additives like flame retardants or opting for cheaper flame retardant products. This poses a challenge for manufacturers of high-quality flame retardants. The weakness in the polystyrene and ABS resin markets has also caused downstream companies to adopt a wait-and-see attitude toward raw material procurement, making it difficult for demand for flame retardants to see a significant increase. Additionally, the instability of market prices has increased the difficulty of signing long-term orders with downstream companies, as price fluctuations may lead to uncertainty in costs and profits for both parties.

III. August Market Outlook

1. Polyethylene

It is anticipated that the low-density polyethylene market may enter a consolidation phase in August. On the supply side, the capacity release effect from prior plant maintenance may continue in August, but the likelihood of a significant supply increase is low. On the demand side, if there is no noticeable improvement, the market will lack upward momentum. However, the potential for further significant declines is also limited. The linear low-density polyethylene market is unlikely to experience significant fluctuations. Petrochemical enterprises' sales policies will continue to significantly influence the market. Under the current supply-demand dynamics, prices are expected to remain relatively stable. The high-density polyethylene market is projected to transition in a stable manner. Although demand is unlikely to see significant improvement, supply is also expected to remain relatively stable, with the market operating in a relatively balanced state.

2. Polypropylene

The likelihood of a significant improvement in the polypropylene market in August is low. The weak demand situation is unlikely to fundamentally improve in the short term, and downstream manufacturers will continue their strategy of purchasing on an as-needed basis. While the supply side will not face severe oversupply, there are also no factors to drive significant price increases. The market will continue to maintain a weak consolidation pattern, with limited price fluctuations.

3. Polyvinyl Chloride (PVC)

The PVC market is unlikely to see major changes in August. On the supply side, although poor profitability of chlor-alkali plants and the summer maintenance season may lead to reduced operating rates, pressure from new capacity additions remains. On the demand side, the downturn in the real estate sector is unlikely to improve significantly, and downstream pipe and profile manufacturers remain in a consumption off-season. Although exports have increased, they are unlikely to alter the overall weak demand situation. The market will continue to exhibit a weak supply-demand balance, with prices maintaining a weak oscillation.

4. Polystyrene

The polystyrene market is expected to face continued pressure in August. If costs do not see a significant rebound and downstream demand remains weak, market prices will continue to be suppressed. Traders may continue to sell at low prices to maintain cash flow, and market confidence will require time and new positive factors to recover.

5. ABS Resin

The ABS resin market may experience a slight downward trend in August. On the supply side, as some manufacturers increase production capacity, market supply will further increase. On the demand side, during the traditional off-season and without significant improvement in the macroeconomic environment, demand is unlikely to see significant growth. The market will continue to face pressure from excess supply, and prices may decline slightly.

From the perspective of the flame retardant industry, in August, as overall plastic market demand is unlikely to see significant growth, demand for flame retardants will also remain relatively stable, without explosive growth. However, for companies focused on R&D of high-performance, environmentally friendly flame retardants, there may be certain opportunities. As environmental requirements become increasingly stringent and consumers place greater emphasis on product safety performance, downstream plastic product manufacturers may increasingly prefer flame retardant products that comply with environmental standards and offer better flame retardant effects. Flame retardant manufacturers should closely monitor plastic market dynamics, strengthen communication and cooperation with downstream enterprises, adjust product structures in a timely manner according to market demand, increase R&D investment, and enhance product competitiveness to address the challenges and opportunities brought by market changes.