[Recycled PP Supply, Demand and Cost Analysis] Market Remains Range-Bound, with Strong Resistance to Processing Margin Recovery

From July 3 to July 9, the recycled PP market experienced a range-bound stalemate. Polypropylene futures saw a slight rise during the week, boosting market sentiment. However, the downstream industries of plastic weaving and injection molding for home appliances remained sluggish in the off-season, suppressing spot prices. The price difference between raw materials and finished granules continued to narrow, and the industry's low operating rate persisted.

Raw material prices : The average weekly price of white transparent PP woven bag crushed raw material in East China is 4580 yuan/ton, down 40 yuan/ton from the previous week; the price of large white PP crushed raw material from appliance dismantling is 4930 yuan/ton, which rose and then fell within the week, dropping 60 yuan/ton by the end of the week; the price of high-quality filament-grade transparent recycled PP pellets is 5680 yuan/ton, and copolymer modified recycled PP pellets are 5950 yuan/ton, with a weekly fluctuation range of ±80 yuan/ton. The output of waste PP from domestic waste appliance dismantling enterprises is stable, the supply in circulation is sufficient, and collection stations are pressuring prices down, resulting in weak resistance to the decline in raw material prices.

Cost and processing profit: The comprehensive processing cost for one ton of recycled PP crushing, sorting, and pelletizing is 685–745 yuan/ton; finished pellets are seeing weak support from market prices, and the industry’s mainstream processing fee is 130–190 yuan/ton. The processing fee for mixed-color recycled PP crushing production lines is 80–95 yuan/ton, which is near the breakeven line, and most small and medium-sized processors are proactively reducing production loads to control output.

Operating rates and supply: The average operating rate of China’s recycled PP pelletizing industry was 37.5%, down 1.2 percentage points week on week (according to Jinlianchuang weekly statistics). Four medium-sized washed pelletizing units in Shandong and Jiangsu reduced operating loads temporarily due to inverted processing margins. In the virgin PP sector, the PP units of Jiujiang Petrochemical and Hebei Haiwei are under routine maintenance, while concentrated arrivals of imported virgin PP cargoes from the Middle East are expected in July. Ample spot supply of virgin material is capping upside room for recycled material. Weekly arrivals of recycled PP pellets at South China ports totaled 0.67 kt, down 0.08 kt from the previous week, indicating weaker replenishment from imported cargoes.

Inventory, downstream demand, and spread: Recycled PP plant finished-goods inventory stands at 8–10 days, indicating a moderately high inventory level. The average operating rates in the downstream woven sack industry and BOPP film industry are 41.16% and 46.21%, respectively, both at seasonal lows for the year. End-product manufacturers maintain only 2–3 days of raw material inventory; the market as a whole is purchasing on a just-in-time basis, with no stockpiling behavior. The spot price of virgin PP for drawing grade in East China is RMB 7,275/ton, and the price spread between virgin and recycled material is RMB 1,595/ton, narrowing by RMB 90/ton month-on-month, which weakens demand for recycled material substitution. Futures-driven sentiment cannot translate into actual physical demand, and price spread transmission between upstream and downstream remains ineffective.

Short-term forecast: With new material supply being ample and the traditional off-season for downstream terminals, recycled PP will maintain a narrow weak oscillation, and there is no significant room for short-term recovery in industry processing fees.

(The data in this article is compiled from publicly available information and is for market reference only. It does not constitute any investment or trading advice.)