PE: Cost‑Driven Price Rise in July, Prices Expected to Rise Then Fall During August‑September

Crude oil prices provided favourable market support in July 2026. Overall supply grew throughout the month, while downstream demand remained tepid with low appetite for restocking, delivering limited backing for spot prices. In August, cost‑side support will persist but downstream performance stays mediocre. With projected supply growth, PE prices may rise before retreating. In September, cost‑side support will weaken amid higher supply. Although downstream demand may see modest improvement, its supportive effect will be limited. The overall PE market price level is expected to trend downward in September.

Prices: Cost‑Side Backing in July Lifts Price Levels of Various PE Grades

Escalating geopolitical tensions in the Middle East in July lent positive support to crude oil prices. Some domestically‑maintained production units resumed operation, boosting domestic PE supply. Nevertheless, several petrochemical producers adopted pre‑sales and reduced production scheduling strategies, tightening spot availability for certain grades. Low inventory levels across mid‑ and upstream segments also kept supply‑side pressure contained. On the demand front, downstream demand was sluggish with few new orders and weak restocking sentiment, offering little support to spot prices.

At the start of August, the cease‑fire in the US‑Iran conflict pulled down oil prices and eroded cost‑side support for PE. Coupled with lacklustre downstream operating rates dominated by small‑volume rigid‑demand purchases, most PE prices trended weaker. Later on, rising numbers of domestic units under maintenance curbed domestic PE supply. Higher operating rates in the agricultural film sector, where buyers maintained rigid‑demand procurement, offered support to the spot market, pushing prices higher amid fluctuations.

Supply: Higher Operating Rates Point to Projected Rise in Overall Supply

In July 2026, the PE operating load rate stood at 75.22 %, down 1.15 percentage points year‑on‑year yet up 0.57 percentage points month‑on‑month compared with June. Petrochemical output losses from scheduled maintenance fell month‑on‑month in July. With one additional production scheduling day versus June, domestic PE output rose to 2.779 million tonnes, marking a 4.12 % month‑on‑month increase and a 5.67 % year‑on‑year gain.

On the import side, temporary shipping passage through key waterways opened after mid‑June, enabling arrival of some Middle‑East‑origin cargoes. PE import volumes edged higher in July versus preceding months. Overall, total PE supply is expected to increase.

Demand: Mixed Downstream Operating Rates, Mediocre Demand Performance

Average operating rates across downstream industries ranged between 16.5 % and 48.42 % in July. Only agricultural film and hollow‑moulding sectors posted month‑on‑month rises of 4.2 percentage points and 0.57 percentage points respectively from June. All other downstream industries recorded lower operating rates: film production fell 2.07 percentage points, plastic pipe manufacturing dropped 1.8 percentage points, packaging and injection‑moulding sectors dipped 0.57 and 0.43 percentage points, and monofilament output declined by 0.38 percentage points.