News Information

The year 2026 marks a significant milestone in the development of the domestic polyethylene market. The total industry production capacity will exceed 450 million tons for the first time (annual production capacity, the same below). Due to the concentrated release of new production capacity and the lack of follow-up demand from the downstream sector, the industry's supply-demand pattern will continue to adjust, and market competition will become more rational. Enterprises will face new challenges in their operations. Overall, China's polyethylene industry is steadily moving from scale expansion competition to value enhancement competition, and structural adjustment has become the main theme of industry development. 

Production capacity continues to increase while the structure becomes more differentiated. 

In 2026, the domestic production capacity of polyethylene is expected to increase by 6.15 million to 7.29 million tons, with a growth rate of 15% to 18.5%. The production ramp-up pace shows a pattern of "lower in the first half and higher in the second half", with limited new production capacity in the first half and a gradual increase in market supply in the second half. 

From the perspective of the raw material route, the new production capacity is mainly from oil-based facilities. Enterprises such as Huajin Amei and Zhongsha Guilei have made significant contributions. At the same time, coal-based facilities have also begun to be put into operation in a concentrated manner. Among them, the 500,000-ton polyethylene plant of BASF Zhanjiang Integrated Base was put into operation in January 2026; the second phase of the 1.2 million-ton ethylene project of China National Petroleum Corporation's Dushanzi Petrochemical in Tarim will be completed in 2026, including two sets of 450,000-ton fully-dense polyethylene and 300,000-ton low-density polyethylene plants. 

From the perspective of product structure, the newly added production capacity shows a clear optimization trend. According to data from Caotou Information, the planned production volume of the full-density plant is 2.75 million tons, accounting for the largest proportion; the high-density polyethylene (HDPE) plant has a production volume of 2.05 million tons, following closely. The production speed of linear low-density polyethylene (LLDPE) has significantly slowed down, and some new plants plan to produce differentiated products such as metallocene-based LLDPE. It is estimated that the growth rate of LLDPE effective production capacity in 2026 is expected to be only 4%, much lower than the 24% growth rate in 2025. The production scale of low-density polyethylene (LDPE) and LDPE/EVA plants has continued to expand since 2025, and the trend of industry upgrading towards high-end and differentiation is clear. 

Zhou Ruixia, an analyst from Jinlianchuang, believes that in 2026, the supply and demand relationship in the polyethylene industry will continue to adjust, presenting a characteristic of "periodic balance seeking and rapid price fluctuations". In the first half of the year, the release of new production capacity was limited, coupled with the reduction in import supply, the market foundation was relatively stable; in the second half of the year, as the capacity expansion gradually took effect, the market will operate under pressure, and after the price recovers from the increase, it may continue to fall. 

Cost trends show significant differences; profit gaps become more pronounced. 

In 2026, the cost end of polyethylene will show a significant differentiation trend, and the profit gap between enterprises following different production routes will further widen. 

Polyethylene produced from oil accounts for nearly two-thirds of the industry's total production capacity, and its profit level is closely related to international crude oil prices. In 2026, the price of crude oil is expected to fluctuate at a high level, and coupled with the downward trend of the spot price of polyethylene, the profit margins of oil-based production enterprises are facing certain pressure. 

A senior analyst from Zhuochuang Information pointed out that large-scale integrated refining and chemical enterprises, leveraging their scale advantages and self-sufficiency in raw materials, can still maintain a certain level of profitability. However, small and medium-sized facilities are under pressure to be phased out or undergo transformation and upgrading. 

Coal-based polyethylene accounts for nearly 20% of the industry's total production capacity, and its cost is directly linked to the price of coal. The coal price is expected to moderately decline in 2026, and the cost advantage of the coal-based route will gradually emerge, with the profit level expected to remain stable. Such production capacity is mainly concentrated in coal-rich regions such as Shaanxi and Inner Mongolia. Relying on resource endowments and policy support, the development foundation of these enterprises is relatively solid. 

The light hydrocarbon production process route enjoys high yield, low cost and low carbon emissions, thus being highly favored by the market. However, it also has the drawback of being highly dependent on imported raw materials. The dependence on imported ethane is expected to exceed 95%, and the sources are highly concentrated, almost all coming from the United States. Market experts stated that in 2026, the global supply of ethane will be tight, with increased demand in the Asian region. However, the export capacity of American ethane is limited. At the same time, trade frictions and geopolitical risks may increase import costs, and the cost pressure on domestic light hydrocarbon-to-ethylene enterprises will increase, with their profit margins continuously being squeezed. Some enterprises may take measures to reduce operating burdens. 

Domestic demand is steadily recovering while exports face challenges. 

In 2026, the domestic apparent consumption of polyethylene is expected to reach approximately 415 million tons, with a year-on-year growth rate of 7.8%. The growth rate is still lower than the growth rate of production capacity. 

In the traditional demand sectors, areas such as packaging films, agricultural films, and pipe materials are experiencing slow growth and facing pressure from external demand. Professional institutions predict that the utilization rates in these sectors are generally within the range of 30% to 55%, with limited order increases and stable seasonal fluctuations. The intensification of global trade resistance has further suppressed traditional demand, and trade measures such as the EU's carbon border adjustment mechanism continue to exert pressure on plastic product exports. 

Wang Chunming, the general manager of Shandong Ruiyang Chemical Co., Ltd., stated that the demand for emerging industries is increasing at a faster pace. The demand for specialized materials such as photovoltaic backsheet films and lithium battery separators is continuously expanding. However, the proportion of emerging fields in overall consumption is still low, and it is difficult to completely offset the weakness in traditional demand. 

The implementation of the "massive equipment renewal" and "used goods exchange for new ones" policies in China has been effective, injecting new impetus into the fields of home appliances, automobiles, and high-end packaging, and driving up the demand for high-performance products such as metallocene polyethylene and high impact polyethylene. This trend not only supports the high-end material market but also guides the industry towards a direction of refinement and differentiation. 

Over the past five years, the compound annual growth rate of China's polyethylene exports has reached 34.5%. In 2026, exports will continue to grow steadily. 

Traders have reported that the proportion of China's polyethylene exports to the Southeast Asian market has been continuously increasing, and the export growth rate of high-end products is higher than that of general materials. Factors such as infrastructure upgrades in the Belt and Road participating countries and the decline in maritime transportation costs have created favorable conditions for polyethylene exports. At the same time, enterprises have also actively responded to the adjustments in global trade policies, enhancing their risk-resistance capabilities through product upgrades and market diversification. 

In conclusion, under the influence of multiple factors such as supply growth, cost differentiation, and demand upgrading in the domestic polyethylene market in 2026, a deep industry adjustment is inevitable. Relevant enterprises need to accelerate technological upgrading and the development of high-end products, and accurately position themselves in the differentiated market landscape, so as to gain a firm foothold and seize the initiative in the new round of industry competition.