Polyethylene Market From Euphoria To Rationality: June Gains Retrace 30-70%, Blow Molding Sector Decline Highlights

Polyethylene Market from Euphoria to Rationality: June Gains Retrace 30-70%,

 Blow Molding Sector Decline Highlights

In the first half of 2026, China's domestic polyethylene market experienced a complete "roller coaster" ride. Influenced by overseas geopolitical tensions, PE prices across all categories were sharply pushed up from late February to early April. Subsequently, starting from May, sentiment and cost-side support weakened, and prices entered a continuous downward channel. As of June, various categories have retraced 30-70% of their gains.

HDPE: Gains Retrace 30-50%+

HDPE reached its year-to-date peak on April 7, rising more than 40% from pre-event levels (an increase of over 3,000 yuan/ton). However, prices have since declined continuously. According to statistics, on June 17, HDPE-China-PE100 pipe grade was quoted at 8,789 yuan/ton, a notable retreat from 10,396 yuan/ton on April 7; low melt injection molding at 7,924 yuan/ton (year-to-date high of 9,643 yuan/ton); small blow molding at 9,185 yuan/ton (year-to-date high of 9,997 yuan/ton);drawing (tape/drawn yarn) at 8,341 yuan/ton (year-to-date high of 10,112 yuan/ton); and film at 8,696 yuan/ton (year-to-date high of 9,551 yuan/ton). Overall, HDPE has retraced 30-50%+ of its gains from year-to-date highs. Going forward, U.S. offers for HDPE grades have increased noticeably. Given the relatively poor quality of these resources and the presence of low-price destocking behavior, subsequent HDPE import volumes may increase significantly.

LDPE: Gains Retrace 70%+

LDPE, with its nearly 50% import dependence and the Middle East being China's core import source for LDPE, saw the most intense speculative sentiment. Its year-to-date high represented approximately a 41% increase from pre-event levels (a rise of over 3,500 yuan/ton), with more pronounced boom-and-bust phenomena. On June 17, LDPE-China-MFI 2 with slip agent-film grade was quoted at 9,607 yuan/ton, a significant retreat from 12,087 yuan/ton on April 7, having retraced over 70% of its gains.

LLDPE: Gains Retrace Approximately 45%

Domestic LLDPE supply has been relatively ample, with price movements slightly smaller than other grades. The year-to-date high represented approximately a 40% increase from pre-event levels (a rise of around 2,600 yuan/ton). On June 17, it was quoted at 8,092 yuan/ton, having retraced approximately 45% from 9,369 yuan/ton on April 7.

Overall, domestic supply has gradually returned since May, and import resources are expected to increase noticeably around September. Supply-side support will continue to weaken.

Cost and Demand Double Squeeze, Blow Molding Sector Decline Highlights

On the international crude oil front, supply risk concerns have continued to diminish amid news that the U.S. and Iran will formally sign a peace agreement and the Strait of Hormuz will gradually reopen. Brent weekly average prices fell to $83.17/barrel, down $8.13/barrel from the previous week.

Supply-side pressure is also increasing simultaneously. The domestic PE blow molding products production operating rate has reached 11.7%, up 2.9% week-over-week and 2.5% above the year-to-date average operating level. Industry production load has clearly recovered, upstream petrochemical enterprises are steadily releasing scheduled output, and PE blow molding raw material resources in the market continue to increase, further highlighting the loose supply-demand landscape. By region, South China has total existing blow molding capacity of 1.6 million tons, serving as the domestic core production region; Northwest China follows with existing capacity of 980,000 tons; East China region capacity is 600,000 tons; and North China has existing capacity of 450,000 tons. Enterprises mostly produce small blow molding, with medium and large blow molding accounting for relatively low proportions.

As of June, the domestic PE blow molding market spot average price was 8,635 yuan/ton, down 357 yuan/ton from the previous week's average. By region, East China small blow molding price was 8,844 yuan/ton, down 228 yuan/ton from the previous week's average; North China small blow molding price was 8,683 yuan/ton, down 400 yuan/ton from the previous week's average; and South China small blow molding price was 8,388 yuan/ton, down 489 yuan/ton from the previous week's average, with South China showing the most pronounced decline.

On the demand side, the market has entered the traditional off-season. This week, domestic PE blow molding products sample enterprises' operating load has somewhat retreated, with the overall operating rate down 1% month-over-month and 6% year-over-year. Large blow molding enterprises have seen a more pronounced operating decline, down 1.43% month-over-month; small blow molding operating rate retreated 0.74% month-over-month. The industry is currently in the traditional demand off-season, with overall market order volumes contracting. Large and medium-sized manufacturers' new orders have generally shrunk, and production plans have been passively reduced. Many small and medium-sized enterprises, due to insufficient new orders, can only maintain low-load intermittent production, with some factories directly shutting down and waiting on the sidelines. Current factory order structures are relatively singular, with production concentrated in rigid demand areas such as food packaging and chemical packaging.

Overall, in the short term, PE blow molding downstream demand will be difficult to improve noticeably, and market purchasing follow-through remains weak. On the cost side, international crude oil prices will continue the downward trend in the short term, with cost support continuously weakening. On the supply side, previously shut-down maintenance units are gradually returning to operation, with strong expectations for increased market circulating cargo volumes. On the demand side, the terminal products industry faces overall weak demand, with downstream factories purchasing only on need and showing insufficient willingness to stockpile. Multiple bearish factors are resonating, making PE blow molding raw material prices prone to decline and resistant to rise in the short term, with an expected downward range of 100-300 yuan/ton.

From a Plastics Industry Perspective: The Transmission Effect of PE Price Volatility on the Flame Retardant Market

As a member of the polymer industry and a flame retardant manufacturer, I would like to supplement several observations from an industry perspective:

First, PE price declines directly compress modified compound manufacturers' profit margins. PE is the main substrate for low-smoke halogen-free cable compounds, flame-retardant pipes, and flame-retardant panels. When raw material prices fall, downstream product manufacturers often demand synchronized price reductions from modified compound manufacturers, but flame retardant and other additive prices do not fall in tandem. This results in modified compound manufacturers being squeezed from both ends—finished product selling prices decline while flame retardant costs remain rigid.

Second, price volatility intensifies formulation adjustment pressure. When PE prices run at low levels, modified compound manufacturers have the incentive to increase PE usage and reduce flame retardant filler addition ratios to lower costs. However, low-smoke halogen-free cable compounds require UL94 V-0 or bundle burning compliance; simply reducing ATH/MDH addition will lead to flame retardancy failure. This is why an increasing number of manufacturers are adopting the "small amount of high-efficiency flame retardant + moderate inorganic filler" synergistic approach—this can both control costs and ensure flame retardancy compliance.

Third, increased import resources may bring new competitive dynamics. The article mentions that subsequent HDPE import volumes may increase significantly, with import resources expected to show relatively noticeable increases around September. Imported materials are typically more price-competitive, which will further suppress domestic PE prices while potentially bringing more diverse material choices. For flame retardant suppliers, this means the need to more closely track modified compound manufacturers' formulation changes.

Warnings and Recommendations for the Flame Retardant Market

Based on the above analysis, I offer several recommendations for low-smoke halogen-free flame retardant-related enterprises:

1.Monitor PE price bottom areas and seize procurement windows. In Q3, PE prices will likely continue to seek bottoms. Flame retardant manufacturers and modified compound manufacturers should closely track raw material price trends and establish reasonable inventories at relatively low levels.

2.Synergistic flame retardant solutions will see continuously growing market demand. Against the backdrop of declining PE prices and intensifying cost pressure, high-efficiency flame retardant solutions that can reduce inorganic filler usage (such as coated red phosphorus masterbatch + small amounts of ATH/MDH synergistic systems) will be more welcomed by the market. Modified compound manufacturers are no longer willing to accept 60-70% ATH filling rates, but instead pursue "low addition, high efficiency" flame retardant solutions.

3.Be alert to chain reactions from downstream demand weakness. PE blow molding products operating rates are down 6% year-over-year; the cable, pipe, and other downstream industries similarly face off-season pressure. Weak terminal demand will transmit upstream, and flame retardant enterprises need to prepare for order fluctuations.

4.Watch for the impact of imported PE on domestic flame retardant solutions. Imported PE quality varies, and some low-price resources may contain impurities or additives that affect flame retardant dispersion effects and flame retardancy stability. Flame retardant suppliers need to assist customers in conducting formulation adaptation for PE substrates from different sources to ensure consistent flame retardancy performance.

5.In the long term, the low-smoke halogen-free megatrend remains unchanged. Despite short-term PE price declines, environmental regulations and fire safety standards have not relaxed. Demand for flame retardants in low-smoke halogen-free cables, flame-retardant building materials, and other fields continues to grow. The key lies in how to meet increasingly stringent standards with more economical solutions.