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2025 Mid-Year Review: Key Developments in China's Polyethylene Industry
Created on 07.29
In the first half of 2025, the polyethylene industry showed the distinctive characteristics of "high growth, strong volatility, and new balance" under the interweaving of multiple factors such as capacity expansion, international trade environment, and geopolitical situation. The following summarizes the key dynamics of the industry from four core dimensions to provide trend references for practitioners.
1. Capacity expansion hits a new high, and the supply-side landscape is reshaped.
China's polyethylene industry saw accelerated growth in H1 2025, with 3.73 million tons of new capacity coming online (+21.6% YoY). Total capacity now reaches 38.26 million tons/year. Major new projects include:
- Inner Mongolia Baofeng: 1.1 million-ton all-density unit
- Wanhua Chemical: 250k-ton high-pressure unit
- Shandong New Era: 450k-ton HDPE + 250k-ton LLDPE lines
- ExxonMobil (Huizhou): 1.23 million-ton mLLDPE facility Production hit 16.15 million tons (+16.6% YoY), setting new domestic records.
2. Sino-US Tariffs "First Tightened and Then Loosened", with Trade Rhythm Showing Phased Fluctuations
In the first half of the year, polyethylene import and export trade was significantly affected by Sino-US tariff policies, showing a "suppressed first and then rising" rhythm change:
January-April: Tariff Escalation Caused Short-Term Market Pressure
Sino-US tariff frictions escalated month by month, and tariffs on polyethylene-related products once rose to 125%. Affected by this, domestic PE export orders shrank significantly. The market's worries about the demand prospect heated up. Coupled with the expectation of increased supply, plastic prices were under phased pressure and declined.
Since May: Tariff Easing Promotes Trade Recovery
As the Geneva talks reached a consensus, 91% of the additional tariffs were cancelled, and market confidence rebounded rapidly:
- The favorable policies directly drove the polyethylene price to stop falling and rebound, and the procurement enthusiasm of the industrial chain was restored;
- There was a "rush to order" effect on the export side. Enterprises rushed to deliver the backlog of orders in the early stage, and the export volume in May increased by more than 15% month-on-month;
- The import procurement strategy shifted from "conservative wait-and-see" to "on-demand stock replenishment", and the trade flow gradually returned to normal.
3. Geopolitical ImpactsJune's Israel-Iran tensions caused:
- Oil price surges affecting petrochemicals
- Speculative trading in LDPE (Iran supplies 48% of China's imports)
- ·Logistics disruptions from U.S. West Coast port congestion
4.Both Import and Export Grow, and the Trade Pattern Highlights Regional Synergy
From January to May 2025, the domestic polyethylene import and export market achieved positive growth simultaneously, and the trade structure was further optimized:
Imports: The Middle East Remains the Core Source, and the Trend of Alternative Procurement Emerges
From January to May, domestic polyethylene imports reached 5.965 million tons, an increase of 432,400 tons compared with the same period last year, a year-on-year increase of 7.82%. From a regional perspective, the Middle East remains the largest source of imports, contributing 48% of imports (2.8615 million tons).
It is worth noting that affected by international logistics and geopolitical factors, enterprises' import strategies have become more flexible: the continuous congestion at U.S. West Coast ports has led to increased logistics costs and longer delivery cycles. Some enterprises have begun to increase the procurement of alternative sources in Southeast Asia and Europe, and the characteristics of diversified import sources have initially emerged.
Exports: The Southeast Asian Market Continues to Grow, with Stable Growth Momentum
In the same period, domestic polyethylene exports reached 415,300 tons, a year-on-year increase of 7.81% (an increase of 30,100 tons), and the export growth rate was basically the same as that of imports. From the perspective of flow direction, Southeast Asia, relying on geographical proximity, industrial chain complementarity and demand potential, remains the core market for China's polyethylene exports, accounting for more than 70% of the total exports. With the improvement of domestic production capacity and product competitiveness, the supporting role of exports to the industry continues to strengthen.
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