Rising feedstock costs and tightening supply expectations have pushed market sentiment firmly into bullish territory. However, downstream demand remains uneven, as converters struggle to keep pace with rapid price increases, leading to cautious buying behavior.
Market participants widely note that PP has been more directly impacted than PE, mainly due to stronger exposure to upstream energy markets. Within the PE segment, LDPE has seen the sharpest gains, reflecting its heavier reliance on Middle Eastern supply—particularly from Iran—and its relatively tighter global availability compared to HDPE and LLDPE.
Prices post massive gains since war began
The scale of the rally is evident when comparing current levels with those before the conflict. China’s export PP segment recorded the strongest gains, with weekly average export prices for homo-PP raffia and injection rising by around 39%, significantly outpacing domestic increases.
The PE complex also saw notable increases, though slightly more moderate compared to PP.
Price gains summary (latest vs pre-war levels)
PP (Polypropylene):
Export (FOB China): ↑ 39% (highest since mid-2022)
Import (CIF China): ↑ 23–25% (highest since mid-2022)
Domestic (Ex-warehouse): ↑ 27–28% (highest since mid-2022)
PE (Polyethylene):
LDPE: ↑ 19% (import), ↑ 29% (domestic) – strongest in PE
HDPE: ↑ 15% (import), ↑ 18% (domestic)
LLDPE: ↑ 13% (import), ↑ 25% (domestic)
The sharper rise in LDPE reflects supply risks linked to disruptions in Middle Eastern shipments, especially from Iran, a key supplier to China.
Futures soar as crude and feedstocks hit multi-year highs
The rally has been further supported by a sharp rise in futures and upstream markets. On the Dalian Commodity Exchange, LLDPE futures jumped by 31%, while PP futures surged by 33% between late February and mid-March.
Energy markets have played a crucial role, with Brent crude rising from around $70/bbl to above $100/bbl. This surge significantly increased production costs across the petrochemical chain. Feedstock prices followed suit, with ethylene soaring by 83% and propylene rising by 39%, both nearing four-year highs.
Market tests higher levels in new week
Early signs in the new week indicate that prices continue to test higher levels, although the pace of increases has started to moderate. Domestic materials are gaining preference due to rising import costs and logistics disruptions.
Some producers have begun cutting operating rates, leading to gradually tightening availability. Market sources report FOB homo-PP offers around $1200–1280/ton, reflecting continued upward adjustments.
Demand remains uneven amid volatility
Despite strong price momentum, downstream demand remains mixed. Many buyers are resisting higher prices and limiting purchases to immediate needs, keeping transaction volumes relatively low.
At the same time, some improvement in buying interest has been observed, with certain buyers beginning to accept higher price levels. However, ongoing volatility has led some producers to suspend offers, making it difficult to secure material.
Market participants emphasize that future price direction will largely depend on crude oil movements, feedstock trends, and geopolitical developments. For now, the market remains highly volatile, caught between rising costs and fragile demand.
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