China PE Inventories Continue to Shrink

China's polyethylene (PE) social inventories continued to move lower, with stocks at monitored social warehouses falling to 365,850 tonnes, down by 11,180 tonnes, or 2.97%, from the previous reporting period. The decline has helped ease supply pressure in the domestic market and provided additional support to polyethylene prices.

The reduction in inventories has strengthened sentiment in the LLDPE market. On July 7, the benchmark PE 2609 futures contract closed RMB 81/tonne higher, supported by increased trading activity, rising open interest, and stronger buying interest from long-position holders. The gains in the futures market also lifted spot market valuations.

Lower overall PE inventories have also slightly improved the supply-demand balance for LDPE. With tighter availability, traders have become more confident in maintaining firm offers, while stronger performance in PE futures has further supported bullish sentiment and higher LDPE price expectations.

Meanwhile, the decline in inventories has reduced the availability of HDPE in the spot market, providing additional support to prices. Positive momentum in the polyethylene futures market has further strengthened confidence in HDPE, creating favorable conditions for continued price increases.

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