Polyethylene prices in China just jumped above the COVID median
Polyethylene prices in China have surged to 8,430 CNY per ton (~$1,227) — now above the median levels seen during the COVID-19 period.
For most of the past two years, polymer markets have been weighed down by global overcapacity and weak demand, making this move notable. The latest spike appears to be driven less by demand and more by supply disruptions across the petrochemical chain.
Recent geopolitical tensions in the Middle East have raised risks around shipping through the Strait of Hormuz, a key corridor for petrochemical feedstocks moving toward Asia. Any disruption to flows of naphtha, LPG, or ethane can quickly ripple through the system because Asian steam crackers depend heavily on imported feedstock.
Source: TRADING ECONOMICS
When cracker utilization drops, the impact propagates quickly:
Less ethylene → less polyethylene → higher polymer prices.
For investors, this is particularly relevant for companies like Braskem (BAK), one of the world’s largest polyethylene producers.
Historically, Braskem has returned meaningful cash to shareholders during stronger petrochemical cycles. The company paid $2.63 per share in December 2021, followed by a $0.67 special dividend in April 2022, after distributing $0.41 in 2019.
Source: Seeking Alpha
Since then, the dividend has disappeared alongside the downturn in petrochemical margins.
If polyethylene prices remain at these levels, I believe it would not only allow Braskem to continue reducing its debt, but potentially resume paying modest dividends to shareholders as the petrochemical cycle stabilizes.