China’s HDPE Market In 2025 Versus 2021: Major Structural Changes

WHEREAS China’s net PP imports collapsed from a peak of 6.1m tonnes in 2020 to around 300,000 tonnes last year, with complete self‑sufficiency in homopolymer grades likely just around the corner, exporters of high‑density polyethylene (HDPE) to China are in a far better position.

But ICIS Supply and Demand Data still show a big decline in HDPE net imports from a peak of 9m tonnes in 2019, at the height of the “China, China out” boom in pandemic-related demand, to 4.9m tonnes.

HDPE imports have obviously fallen by 4.1m tonnes, or 45%. A world‑scale plant is between 600,000–800,000 tonnes a year, meaning that overseas demand at the equivalent of six to eight world‑scale plants has been lost.

The headline dynamics are the same in HDPE as in PP. Late 2021 marked the Evergrande Turning Point, when China’s demand growth for both polymers, and for all other chemicals and polymers, underwent a secular and long‑term slowdown, the severity of which took most industry players by surprise.

China’s HDPE demand growth averaged 11% between 1992 and 2025 compared with the ICIS forecast of just 1% in the decade from 2026 until 2036.

Sure, China’s economy was always going to mature, resulting in a significant decline in annual percentage growth — a pattern seen in many countries as they have developed.

And, of course, back in 1992, at the start of the Chemicals Supercycle, China’s HDPE market was tiny, at some 800,000 tonnes of demand versus last year’s 20m tonnes. So, even just 1% growth from this much bigger base will add significant new volumes.

However, I have long argued that China is different from every other country in the world.

China enjoyed a demographic dividend of a youthful population, powering its rise to the world’s No.1 export‑based manufacturer as well as driving a strong domestic economy.

While China will likely maintain its export dominance through higher‑value manufacturing, automation and moving lower‑value manufacturing to lower labour‑cost locations, turning around weak domestic consumption growth is going to be extremely difficult given the demographics.

Births in 2025 were 7.92m, down 17% from 2024 (a drop of 1.62m). The birth rate in 2025 was 5.63 births per 1,000 people, the lowest on record. In 2024, which was the latest data I could find, China’s dependency ratio — i.e. the number of non‑workers to workers — was 44–46%. UN projections suggest this could rise to 65–75% by 2050.

The working‑age population — the people who produce goods and services and the people making major consumer purchases — will likely decline from 2025 levels by 23% in 2050, 51% in 2075, and 71% by 2100, according to my ICIS colleague Kevin Swift.

This is all a legacy of the One Child Policy.

In 2021, real estate plus infrastructure accounted for 31.7% of China’s GDP (versus a 34% peak in 2015). The sector also employed 15% of the non‑farm workforce and stimulated steel, cement, home appliances and local‑government land‑sales revenue. Housing wealth had become the store of savings for hundreds of millions of households.

When Beijing tightened credit and ended the debt‑driven growth model, the bubble deflated rapidly. About 85% of the price gains that once supported household wealth evaporated after 2021, according to Macquarie analysts.

By late 2025, over $18trn in household wealth had been wiped out by falling home values. Real estate is now worth some 25% of GDP.

A lot has been made of China’s surging exports that have gone some way to compensating for the loss of growth momentum. But any economy cannot live by exports alone.

And with fewer and fewer workers, automation, supported by China’s very practical uses of AI, is likely to become increasingly important in maintaining export competitiveness.

What then of domestic spending, assuming no major transfers of wealth from the owners of capital to everyone else?  China has long suppressed wages to support is manufacturing and has a weak welfare system.

China might find a way through these dilemmas. One suggestion is immigration. But the scale of required immigration to turn around a population that could shrink to as little as 373m by the end of the century would be on a scale never seen before.

China’s Capacity Expansion and Anti‑Involution Policies

The other side of the coin is obviously the rise in China’s HDPE capacity as the chart below illustrates.

In 2021, China’s HDPE capacity as a percentage of its demand was 65%. Last year, it reached 81%, and on paper it is due to reach 100% by 2031 (not the same as operating rates, of course) before dipping ever so slightly to 96% by 2036.

What we don’t know is the extent to which China’s anti‑involution policies will change this picture as older, less efficient plants shut down, balanced against the start‑up of new, super‑sophisticated modern plants.

“When we look at [China’s] anti‑involution [policy] and with the people we have on the ground and all the relationships that we have, and our technology business unit, there is a lot of movement — there is a lot of discussion,” said Peter Vanacker, CEO of LyondellBasell, on the company’s Q2 earnings call.

“We’re waiting of course to see what the decision will be, but we believe that because of all the discussions that are happening, that they are very diligent and there is a very serious evaluation going on by the NDRC (National Development and Reform Commission). We expect that something will come out,” he added.

China may also be widening the range of inefficient capacities to potentially shut down.

“We hear, for example, criteria for asset rationalisation not at 300,000 tonnes/year for a cracker but at 500,000 tonnes/year,” said Vanacker.

China’s potential new naphtha consumption tax could also work to curb production, the CEO added.

The Financial Impact on Exporters

Returning to the here and now, today’s final chart, in the same fashion as one I presented for PP two weeks ago, shows the great value of combining ICIS data sets together.

I took average China HDPE injection, film, blow‑moulding and PE100 black pipe (HDPE) all‑applications prices multiplied by the tonnes the China Customs Department reported were imported from China’s top trading partners in each of these years — before and after the Evergrande Turning Point. Then I subtracted the 2025 total from 2021.

Iran was the biggest loser with sales turnover down by $856m on production and sanctions as well as market issues, followed by Saudi Arabia at $727m lower and South Korea at $408m lower.

This was a reflection both of lower pricing and lower imports by China. In 2021, the price of the four grades of HDPE averaged $1,120/tonne CFR China, falling to $866/tonne CFR China in 2025. In the case of South Korea, imports fell from 648,612 tonnes to 561,880 tonnes.

Outlook for Global Capacity Rationalisation

Conclusion

Vanacker anticipates closures of around 3.7m tonnes/year of ethylene capacity in South Korea, and 5m tonnes/year in China. In Southeast Asia, 3m tonnes/year has already been shut down with a further 1m tonnes/year of announced closures.

Perhaps, just perhaps, this will mean the downturn won’t drag into the 2030s.

But whatever the timing of the recovery, for the reasons described above I believe that the China HDPE market will never be the same again. The growth we saw in 1992–2021 was truly a one‑off.

The next big growth story is in the developing world outside China, where, as I discussed on 14 January, competition is about to intensify.

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