[PP Daily Review] Trading Remains Dull In The Off-Season As The Polypropylene (PP) Market Weakens And Declines

1. Today's Summary

Sinopec East China PP ex-factory prices were reduced by RMB 100–200/mt. Among them, F800E is quoted at RMB 9,550/mt in Shanghai, GM1600E at RMB 10,100/mt in Shanghai, M30RH at RMB 9,700/mt in Zhenhai, and M50RH at RMB 10,800/mt in Zhenhai.

Domestic PP units saw both shutdowns and restarts. Donghua Energy’s 400 kt/year PP unit in Maoming resumed operations, while Sino-Korea Petrochemical’s 200 kt/year STPP unit was shut down for maintenance. The daily production share of raffia grade increased slightly by 0.23 percentage points to 31.45%.

3. In the earlier period, the PP market was in a supply shortage, and reduced supply supported market prices. In the next period, both supply and demand are expected to decline simultaneously, with demand falling more than supply, which will weaken the support for market prices.

2. Spot Overview

Figure: PP Price Summary Table

The spot prices of PP in various regions across the country have mostly declined, with the national average price at 9,758 yuan/ton, down 18 yuan/ton; in East China, it is 9,778 yuan/ton, down 32 yuan/ton; in North China, it is 9,661 yuan/ton, down 19 yuan/ton; in South China, it is 9,914 yuan/ton, down 10 yuan/ton; in Central China, it is 9,702 yuan/ton, down 15 yuan/ton; in Northwest China, it is 9,525 yuan/ton, down 18 yuan/ton; only in Southwest China has there been a slight increase of 10 yuan/ton to 9,740 yuan/ton, while the downstream BOPP price remains unchanged at 10,850 yuan/ton. Today, the futures market weakened, coupled with a drop in international oil prices, leading to insufficient support for raw material costs. Additionally, the downstream is in an off-season for demand, resulting in sluggish market transactions, causing traders to lower their quotations, which has increased the negotiation space for spot transactions. Today, the mainstream spot trading range for wire drawing in East China is between 9,700 and 9,900 yuan/ton.

3. Market Forecast

The geopolitical situation is fluctuating, with temporary cost support for crude oil, and maintenance of PP facilities remains concentrated. The supply of spot goods is relatively tight; however, the weak demand season is difficult to change, with low operating rates and weak orders from end users, leading to continued weak purchasing intentions. The interplay of bullish and bearish factors is ongoing, but the shortfall on the demand side dominates. It is expected that the domestic polypropylene market will maintain a generally weak and oscillating trend next week.

Editor: Abby

(Source: Longzhong)