High Costs Coincide with Accelerated Inventory Reduction, Driving Up Polypropylene Prices

Overview

This week, polypropylene prices rose strongly. As of the 29th, the national average price of raffia was 6627 yuan/ton, an increase of 152 yuan/ton or 2.35% compared to last week. This week, the polypropylene market rebounded again. Geopolitical uncertainties in Iran persist, leading to stronger crude oil performance. Additionally, a cold snap in the US has impacted refinery operations and raw material exports, improving market trading sentiment. Futures prices have risen significantly. On the spot market, maintenance turnarounds in January and February remain high, with tight supply in East and South China. Downstream demand and orders have picked up before the holiday, supporting continuous price increases. However, with the upcoming Chinese New Year holiday next week, demand is expected to decline seasonally, providing limited future support and casting doubt on the sustainability of the upward trend.

Recent focus points in the polypropylene market:

As of January 28, 2026, China's commercial inventory of polypropylene totaled 648,300 tons, a decrease of 31,800 tons compared to the previous period, a decrease of 4.68% month-on-month. Among them, the total inventory of production enterprises decreased by 7.38% month-on-month; the inventory of sample traders increased by 0.78% month-on-month, and the inventory of sample port warehouses decreased by 1.99% month-on-month. In terms of inventory by grade, raffia grade inventory decreased by 8.48% month-on-month; fiber grade inventory decreased by 3.81% month-on-month.

2. The average polypropylene capacity utilization rate this period was 74.58%, a decrease of 1.44% compared to the previous period. Sinopec's capacity utilization rate was 79.86%, an increase of 1.11% compared to the previous period. There were no fluctuations in Sinopec's plant startups or shutdowns during the week. The increase in Sinopec's capacity utilization rate was due to increased production at plants such as Sino-Korean Petrochemical. The average polypropylene capacity utilization rate decreased due to shutdowns at Zhongjing Petrochemical Phase II Line 1, Qinghai Salt Lake's 160,000 tons/year plant, and Dushanzi Petrochemical Line 1, among others.

As of January 29, 2026, the weekly loss of domestic polypropylene (PP) production volume was 249,270 tons, up 4.30% from the previous week. Among them, maintenance-related losses amounted to 191,220 tons, an increase of 8.22% compared to the previous week, while production reduction losses were 58,050 tons, a decrease of 6.79% compared to the previous week. Few maintenance units were restarted in the early part of the week, and most maintenance units remained in their previous maintenance state. Due to the unexpected shutdowns of Zhongjing Petrochemical and Dushanzi Petrochemical, the estimated loss of domestic PP production due to maintenance increased.

I. Cost Overlays and Macro-level Promotion Pushed higher during the week

This week, polypropylene prices have risen sharply. As of the 29th, the national average price for raffia was 6627 yuan/ton, an increase of 152 yuan/ton or 2.35% compared to last week. This week, the polypropylene (PP) market returned to an upward trend. Uncertainty surrounding Iran persists, and crude oil performed strongly. Additionally, a cold wave in the United States impacted refinery operations and raw material exports, improving market trading expectations and causing a significant rise in futures prices. On the spot market, maintenance shutdowns remained at high levels in January and February. Spot supply in regions like East and South China remained tight, and downstream operating rates and orders rebounded before the holiday, supporting continuous price increases. Looking ahead to next week, the Spring Festival holiday is approaching, and demand is expected to decline seasonally, limiting future support and raising doubts about the sustainability of the upward trend.

Table 1: China Polypropylene Weekly Supply and Demand Balance Sheet

Two. Translate the above content into English and output the translation directly, without any explanation. New maintenance additions reducing supply, capacity utilization rate decreased month-over-month.

Forecast: This period's average polypropylene capacity utilization rate is 74.58%, a decrease of 1.44% compared to the previous period; Sinopec's capacity utilization rate is 79.86%, an increase of 1.11% compared to the previous period. There are no planned start-up or shutdown fluctuations of Sinopec units within the week. Increased production load at units such as Sino-Korean Petrochemical has led to an increase in Sinopec's capacity utilization rate. The shutdown of Zhongjing Petrochemical's Phase II Line 1, Qinghai Salt Lake's 160,000 tons/year unit, and Dushanzi Petrochemical's Line 1, among others, has resulted in a decrease in the average polypropylene capacity utilization rate.

1 Inventory destocking is accelerating in the industry, impacting commercial sectors. Total inventory decrease.

As of January 28, 2026, China's total commercial inventory of polypropylene was 648,300 tons, a decrease of 31,800 tons compared to the previous period, a month-on-month decrease of 4.68%. Among them, the total inventory of production enterprises decreased by 7.38% month-on-month; the inventory of sample traders increased by 0.78% month-on-month, and the inventory of sample port warehouses decreased by 1.99% month-on-month. In terms of inventory by grade, raffia grade inventory decreased by 8.48% month-on-month; fiber grade inventory decreased by 3.81% month-on-month.

2 、Resumption of operations for enterprises after pre-shutdown maintenance. Polypropylene capacity utilization rate increased month-over-month.

As of January 28, 2026, China's total commercial polypropylene inventory was 648,300 tons, a decrease of 31,800 tons from the previous period, a decrease of 4.68% month-on-month. Among them, the total inventory of production enterprises decreased by 7.38% month-on-month; the inventory of sample traders increased by 0.78% month-on-month, and the inventory of sample port warehouses decreased by 1.99% month-on-month. In terms of different grades, raffia grade inventory decreased by 8.48% month-on-month, and fiber grade inventory decreased by 3.81% month-on-month.

Table 2: Domestic Regional Polypropylene Weekly Production Table

3 High prices lead to increased resistance to sales, and manufacturers' inventories rise.

As of 2026 Year 1 Moon 28 On [Date], the inventory level of Chinese polypropylene manufacturers was at [Number]. 40.09 Ten thousand tons, a decrease compared to the previous period. 3.2 ten thousand tons, a month-on-month decrease of 7.38% Upstream manufacturers appropriately adjusted prices due to cost support, actively destocked to mitigate year-end inventory risks, and downstream factories replenished their stock as needed. Consequently, manufacturers' inventory slightly decreased during the week.

Replenishment of New Year goods drives packaging demand, downstream operations are tiered.

The average operating rate of downstream polypropylene industries showed a downward trend in this period, with only BOPP and PP non-woven fabrics increasing.During the week, non-woven fabric bag demand rose due to the approaching Spring Festival, significantly supporting orders for non-woven fabrics used in packaging, leading to an increase in the average operating rate of the PP non-woven fabric industry. In terms of BOPP, supported by the cost side, film companies raised prices, stimulating downstream restocking. At the same time, in order to ensure stable raw materials after the holiday, downstream users moderately stocked up before the holiday, providing slight support for the industry's operating rate. In the CPP industry, pre-holiday stocking and order delivery came to an end, and companies proactively reduced their operating rates to avoid inventory accumulation, resulting in a 3.97% decrease in the operating rate. Regarding transparent PP, demand for household goods, lunch boxes, and milk tea cups was still acceptable, but demand for medical devices and stationery sheets decreased. In the modified PP industry, pre-holiday demand for automobiles and home appliances was released, and sales showed signs of recovery, pushing the modified industry's operating rate to remain high. As downstream stocking nears completion and logistics become tighter, the industry's average operating rate is expected to decline next week.

BOPP This week, BOPP prices have seen an upward trend. As of January 29th, the mainstream ex-factory price for thick light BOPP film in East China is between 8300-8500 yuan/ton, an increase of 200 yuan/ton week-on-week, a rise of 2.47%. Crude oil prices have risen, and both futures and spot prices for PP have significantly increased. Some petrochemical ex-factory prices have also gone up, providing strong cost-side support. Film manufacturers' ex-factory prices have increased by 100-300 yuan/ton, with mainstream market prices rising by 200 yuan/ton. Although new BOPP production capacity was released this week, some regions are experiencing tight supply. The order fulfillment period for film manufacturers is mostly around 10-20 days. Additionally, considering the uncertainties in logistics and transportation before and after the festival, many are stocking up and placing orders in advance. Currently, film manufacturers are busy fulfilling previous orders, and downstream customers and traders are more willing to accept goods, leading to a significant decrease in finished product inventory for film manufacturers. In the short term, due to favorable cost and supply-demand factors, BOPP film prices may have room for further increases.

CPP Recent strength in the futures market has boosted market confidence, coupled with rising raw material prices stimulating a rebound in market sentiment, providing strong support for film manufacturers. On the demand side, with the approaching Spring Festival, essential packaging for food and fresh produce is entering its final peak period before the holiday, and downstream packaging factories are actively rushing to fulfill orders. However, most factories plan to shut down 1-2 weeks before the Spring Festival, and film manufacturers are prioritizing the consumption of existing inventory, reducing new purchases, leading to a 2.39% month-on-month decrease in raw material inventory days. Film manufacturers are largely proactively scaling back order intake, no longer accepting long-term orders, and only conducting small, essential replenishment orders, resulting in a slight cooling of order conditions. CPP film prices are struggling to rise; as of January 29th, the price of low-temperature composite film in East China was 10,400 yuan/ton, unchanged from last week.

、 Cost support loosens, polypropylene oil production profit recovers.

Looking ahead to the next period, the US-Iran situation presents significant uncertainties, and the disruptive effects of the US cold wave on crude oil supply are gradually diminishing. Oil prices are likely to experience a phase of correction, and international oil prices are expected to fall next week, leading to improved oil-based PP margins. In the thermal coal market, downstream industrial enterprises are about to begin their holidays, and power plant daily consumption is expected to decline further, resulting in limited overall restocking pressure. Thermal coal prices are likely to remain weak and stable, and coal-based PP margins are expected to improve slightly next week.

This week, the profits of coal-based and methanol-based PP rebounded, while those of oil-based, externally sourced propylene-based, and PDH-based PP declined. On the cost side, looking at the international crude oil market, tensions between the US and Iran, coupled with the cold snap in the US dragging down crude oil production and the slower-than-expected resumption of production at some oil fields in Kazakhstan, led to an increase in the average international oil price this week. The profit for oil-based PP rebounded to -548.13 yuan/ton. In the thermal coal market, end-users remained cautious with their procurement, mainly focusing on digesting their own inventory and transporting long-term contract coal, while maintaining just-in-time purchases for market coal. Thermal coal prices fluctuated narrowly, and coal-based PP prices rose significantly amid speculative sentiment, with coal-based PP profits recovering to -81.73 yuan/ton.

V. Translate the above content into English and output the translation directly without any explanation. Supply and Demand Pressures Both Prominent, Market Unlikely to See Substantial Breakthrough

Table 3 Forecast of Polypropylene Supply and Demand Balance in China

Supply: Increased resumption of equipment maintenance, supply side expected to trend upward.

Supply is expected to increase. Ningbo Kingfa's second production line has resumed operation, and most of the new maintenance shutdowns are concentrated in February, indicating an upward trend in short-term supply expectations.

Demand from downstream orders is expected to decline gradually.

Demand side is weak and tending downwards. Mainstream orders for downstream factories are nearing their end, with some demand for New Year's goods packaging and modifications following up, maintaining an overall weak expectation.

Cost: International crude oil prices are expected to ease, slowing down the cost support for oil-based products.

Easing cost-side support and weak global economic demand expectations are suppressing international oil prices, with expectations of loosening oil-based costs. Propane import prices remain high, providing short-term support.

Conclusion (Short-Term)Polypropylene market is expected to fluctuate upwards in the next period, with opportunities for price rebound in low-priced regions. Reduced circulation of low-priced spot goods has created a passive price surge in the market, driven by demand for New Year packaging, leading to a cautiously bullish market sentiment. Key points to watch: 1. Supply side is expected to increase. Ningbo Kingfa's second line unit has resumed operation, and most new maintenance shutdowns are concentrated in February, indicating a short-term upward trend in supply. 2. Demand side is weak and trending downwards. Downstream factories are nearing the end of their mainstream orders, with some follow-up demand for New Year express packaging and modified materials, but overall expectations remain weak. 3. Cost support is slowing down. Weak global economic demand expectations are suppressing international oil prices, and oil-based costs are expected to ease. Propane import prices remain high, providing short-term support. The price of raffia in East China is expected to be 6650-6800 yuan/ton.

Conclusion (medium to long term): The polypropylene market is expected to trend higher in the first half of the month and lower in the latter half. Macroeconomic positive factors are boosting the market, with a press conference from the Ministry of Commerce clearly outlining various favorable policies for China's manufacturing exports, boosting consumer confidence. Cost-side factors are strongly supporting the market, especially the firm import cost of propane, which has rekindled enthusiasm for price increases in the polypropylene market. The supply side is facing a temporary window of new capacity expansion, but the planned maintenance losses in February are expected to decrease, offering little additional support to the market. Demand remains weak, with the Spring Festival holiday interspersed in mid-February. Post-holiday inventory pressure is rising, and downstream orders have not yet recovered. High raw material prices will constrain downstream purchasing enthusiasm. Considering these factors, the market is expected to trend higher in the first half and lower in the latter half of next month. The price of East China filament is expected to be around 6600-6800 yuan/ton.