Polyethylene (LDPE, LLDPE): Cycles

How new cracker waves sink prices for years

PE prices follow ethylene and the capacity cycle. New PE trains come in waves tied to crackers, mostly in China, the US and the Gulf, and push operating rates down for years: from the mid-80s in 2021 to 77% in 2025, with a bottom near 74% expected in 2027-28 (Argus). In a glut the floor is the cash cost of the marginal naphtha-based producer in Asia; when prices fall below it, non-integrated plants cut rates or close (Southeast Asia, Europe, Korea). The ceiling comes from supply shocks: the 2021 Texas freeze, and the 2026 Hormuz disruption that lifted Indian LDPE film prices by about 60% in ten weeks. India's prices track CFR India import parity plus duty.

A non-integrated Asian producer needs roughly $150-250/t over ethylene to cover conversion (indicative). In Jan 2026 LLDPE CFR South Asia ($855/t) was only about $100-150/t above Asian ethylene in the $700s (indicative). In April 2026 LDPE CFR India ($1,680-1,750/t, 8 Apr) held about $200/t over SE Asia ethylene ($1,495-1,505/t), while Far East LLDPE ($1,150-1,200/t) fell below NE Asia ethylene ($1,445-1,455/t) (Polymerupdate, Apr 2026).

Booms and busts

1. 2008-2009

   The financial crisis cut demand just as Gulf ethane crackers and PE trains started. Prices collapsed with ethylene, then recovered on Chinese stimulus.

   Asian ethylene fell from about $1,400/t to $500-600/t in late 2008 (indicative, ethylene tile); PE levels not retrieved

2. 2021

   Post-Covid packaging demand plus the February 2021 Texas freeze, which shut most US crackers and PE plants for weeks, created a global shortage and record margins.

   not retrieved; US and Asian PE prices reached multi-year highs in 2021 (indicative)

3. 2023-2025

   Chinese and US additions outran demand. Indian import prices fell steadily, with HDPE film at the lowest level in ChemOrbis records in Dec 2024 and a further slide in H2 2025.

   LLDPE film CIF India $915-955/t (Dec 2024, ChemOrbis); CFR South Asia LLDPE film $935/t (6 Aug 2025) to $830/t (3 Dec 2025) (Platts via S&P Global)

4. March-May 2026

   The US-Iran conflict disrupted Hormuz, stranding Gulf polymer cargoes. Indian and South Asian buyers, who rely on Gulf supply, saw the sharpest rises; prices eased from late May.

   LDPE film CFR South Asia $1,050/t (30 Jan 2026) to CFR India $1,680-1,750/t (8 Apr 2026); LLDPE film CFR South Asia $855/t (28 Jan) to CFR India $1,470-1,550/t (15 Apr) (Platts via S&P Global; Polymerupdate); European LDPE up 31% (ESM Magazine, Q2 2026)

What drives the cycle

• Chinese capacity additions. China added about 11 Mt of PE in five years and plans more in 2027-28; its import needs set the clearing price for Gulf and US exporters.
• Ethylene and feedstock costs. Naphtha follows crude; ethane follows US gas. The gap decides whether naphtha-based Asian producers run or shut.
• Gulf supply and Hormuz. The Middle East supplies close to 25% of world PE and PP exports (S&P Global 2026); a disruption at Hormuz moves Indian prices most.
• Packaging demand and regulation. Film follows food and consumer spending; bans on single-use items and recycled-content rules shift some demand to recycled resin.
• Trade policy. US tariffs of 19-20% on Southeast Asian goods (Argus 2026), Chinese tariffs on US goods and India's QCO changes redirect flows.

Metrics to track