2026 is a landmark node in the development of the domestic polyethylene market, and the total production capacity of the industry will exceed 45 million tons (annual production capacity, the same below) for the first time. Affected by factors such as the concentrated release of new production capacity and the weak follow-up of downstream demand, the supply and demand pattern of the industry will continue to adjust, market competition will become more rational, and enterprise operations will face new tests. 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 grow and structural differentiation intensifies
In 2026, the new domestic polyethylene production capacity is expected to reach 6.15 million ~ 7.29 million tons, with a production capacity growth rate of 15%~18.5%. The pace of production shows the characteristics of "low before and high after", with limited new production capacity in the first half of the year and a gradual increase in market supply in the second half of the year.

From the perspective of raw material routes, the new production capacity is mainly oil-based devices, and large refining and chemical enterprises such as Huajin Aramco and Zhongsha Gulei have contributed a lot, while coal-to-coal plants have also ushered in centralized production. Among them, BASF's 500,000-ton polyethylene plant at the Zhanjiang integrated base has been put into operation in January 2026; PetroChina Dushanzi Petrochemical Tarim Phase II of the 1.2 million tons ethylene project will be fully completed in 2026, including two sets of 450,000 tons of full-density polyethylene and 300,000 tons of low-density polyethylene plants.
From the perspective of product structure, the new production capacity shows a clear optimization trend. According to the data of Zhuochuang Information, the planned output of full-density plants is 2.75 million tons, accounting for the largest proportion; High-density polyethylene (HDPE) units followed with 2.05 million tons. The production rate of linear low-density polyethylene (LLDPE) has slowed down significantly, and some new plants are planned to produce differentiated products such as metallocene LLDPE. It is estimated that the effective production capacity growth rate of LLDPE in 2026 is only 4%, which is far lower than the growth rate of 24% in 2025. The scale of low-density polyethylene (LDPE) and LDPE/EVA plants will continue to expand from 2025, and the trend of high-end and differentiated transformation of the industry is clear.
Zhou Ruixia, an analyst at Jinlianchuang, believes that the supply and demand relationship of the polyethylene industry will continue to adjust in 2026, and the overall characteristics of "stage balance and rapid price fluctuations" will be presented. In the first half of the year, the release of new production capacity was limited, and the import supply was reduced, and the market foundation was relatively stable; In the second half of the year, with the gradual implementation of capacity expansion, the market will be under pressure, and prices may continue to bottom out after giving up gains.
The cost trend is differentiated and the profit gap is highlighted
In 2026, the cost side of polyethylene will show a significant differentiation trend, and the profit gap between enterprises with different process routes will further widen.
Oil-based polyethylene accounts for nearly two-thirds of the industry's total production capacity, and the profitability level is closely related to international crude oil prices. In 2026, crude oil prices are expected to fluctuate at a high level, superimposed on the decline in polyethylene spot prices, and the profit margins of oil production enterprises are under certain pressure.
Zhuochuang Information analysts pointed out that large-scale refining and chemical integration enterprises can still maintain a certain degree of profitability by virtue of their scale advantages and raw material self-sufficiency advantages, while small and medium-sized plants are facing the pressure of elimination or transformation and upgrading.
Coal-to-polyethylene accounts for nearly 20% of the industry's total production capacity, and the cost is directly linked to the price of coal. Coal prices are expected to fall moderately in 2026, and the cost advantage of coal-based routes will gradually emerge, and the profitability level is expected to remain specific. This type of production capacity is mainly concentrated in coal-rich areas such as Shaanxi and Inner Mongolia, relying on resource endowment and policy support, and the foundation for enterprise development is relatively stable.
The light hydrocarbon process route is favored by the market due to its advantages such as high yield, low cost and low carbon emissions, but there is also a shortcoming of high dependence on imports of raw materials, and the dependence on ethane imports is expected to exceed 95%, and the source is highly single, almost all of which come from the United States. Market participants said that in 2026, the global ethane market will be tight, and demand in Asia will increase, but the export capacity of ethane in the United States will be limited; At the same time, trade frictions and geopolitical risks may push up import costs, the cost pressure of domestic light hydrocarbon polyethylene enterprises will increase, profit space will continue to be squeezed, and some enterprises may take measures to reduce negative operation.
Domestic demand is steadily recovering, and exports are facing challenges
In 2026, the apparent consumption of domestic polyethylene is expected to reach about 41.5 million tons, a year-on-year increase of 7.8%, and the growth rate is still lower than the growth rate of production capacity.
In the traditional demand field, packaging film, agricultural film, pipes and other fields are in a state of low-speed growth and external demand pressure. Professional institutions predict that the operating rate in the above fields is generally in the range of 30% to 55%, with limited order increments and seasonal fluctuations stabilizing. Global trade resistance has intensified to further suppress traditional demand, and trade measures such as the EU's carbon border adjustment mechanism continue to put pressure on plastic product exports.
Wang Chunming, general manager of Shandong Ruiyang Chemical Co., Ltd., said that the demand growth of emerging industries has accelerated, and the demand for special materials such as photovoltaic backsheet film and lithium battery separator has continued to expand, but the proportion of emerging fields in overall consumption is still low, making it difficult to fully hedge against the weak traditional demand.
The implementation of domestic policies of "large-scale equipment renewal" and "trade-in of consumer goods" has injected new momentum into home appliances, automobiles, high-end packaging and other fields, driving the demand for high-performance products such as metallocene polyethylene and high-impact polyethylene rising. This trend not only supports the high-end material market, but also guides the industry to develop in the direction of refinement and differentiation.
In the past five years, the compound growth rate of China's polyethylene exports has reached 34.5%, and exports will maintain steady growth in 2026.
Traders reported that the proportion of China's polyethylene exports to Southeast Asia continued to increase, and the export growth rate of high-end products was higher than that of general materials. Factors such as infrastructure upgrading and shipping costs in the "Belt and Road" jointly built countries have created favorable conditions for polyethylene exports. At the same time, enterprises are also actively responding to global trade policy adjustments and enhancing their ability to resist risks through product upgrading and market diversification.
In short, in 2026, the domestic polyethylene market will be affected by multiple factors such as supply growth, cost differentiation, and demand upgrading, and the in-depth adjustment of the industry has become inevitable. Relevant enterprises need to accelerate technological upgrading and high-end product development, and find the correct positioning in the differentiated market pattern in order to gain a firm foothold and win opportunities in the new round of industry competition.