Phased Rally Ends, Polypropylene Returns to Fundamental Consolidation

After the May Day holiday, the domestic polypropylene market experienced a phase adjustment, following the holiday.PPThe market price rose slightly due to factors such as cost support and limited supply flow. After the holiday, as the positive factors were gradually digested, the supply-demand game intensified, leading the price into a period of oscillation and consolidation, without continuing the upward trend before the holiday.

Data source: JLC

On the supply side, domestic polypropylene producers operated normally during the May Day holiday, and will continue to do so after the holiday.PPProduction rate remains at63%Nearby operations; it is worth noting that after the holiday, the inventory levels of petrochemicals are86ten thousand tons, compared to the inventory build-up before the holiday11Ten thousand tons, growth rate14.67%, significantly lower than the same period last year24.81%This inventory situation supported the price increase in the earlier period and also limited the room for price correction after the holiday.5No new facilities are scheduled to come into operation in the month, and there is no significant pressure on the market in the short term, supporting the market to maintain a consolidation trend.

Downstream factories gradually resumed operations after the holiday, but the pace of resumption has been moderate, with procurement mainly driven by immediate restocking needs and no significant surge in demand observed. Demand from traditional downstream sectors such as plastic woven products remains weak, as the ongoing slump in the real estate sector continues to weigh on plastic woven demand. Overall, downstream processors’ profit margins have been squeezed by fluctuations in raw material prices, leading to cautious buying sentiment. Most enterprises are focused on fulfilling existing orders, with limited new orders, which is insufficient to support sustained price increases and has consequently pushed the market into a consolidation phase.

From the cost perspective, international crude oil prices remained high before the holiday due to the geopolitical situation in the Middle East, pushing up the cost of polypropylene and becoming the core driving force behind the price increase before the holiday. After the holiday, international crude oil prices fluctuated and declined, leading to a decline in futures and causing the spot market sentiment to become more cautious. In addition, the cost side still showed a differentiated trend, with coal-based production showing distinct characteristics.PPMaintain a certain profit advantage, while oil-basedPPProfitability pressures and the instability of cost support have made it difficult for the market to sustain upward momentum, leading instead to a period of consolidation and volatility.

Overall, the polypropylene market showed a trend of rising and then stabilizing after the May Day holiday. The core reason is that the positive factors before the holiday have been digested, and the supply and demand game has tended to balance. The weakness in the demand side has limited the upward potential. In the short term, the market is unlikely to form a clear trend and will maintain a range consolidation with limited price fluctuations. For market participants, it is advisable to reasonably arrange procurement and sales within the consolidation range and proceed with caution.