[Recycled PP Weekly Review] Off-Season Demand Weighs on the Market, Keeping the Price Center Moving Lower

This week, the domestic recycled PP market is overall weak and declining, with the national average price of recycled PP pellets dropping by 40 yuan/ton over the week. There is a significant regional price disparity. As of July 9, the mainstream price for transparent first-grade recycled PP pellets in Shandong, North China is 5800-6100 yuan/ton, in East China it is 5600-5700 yuan/ton, and in South China it is 5700-5900 yuan/ton, with weekly adjustments ranging from 50 to 100 yuan/ton.

The cost side shows a dual weakening pattern for raw materials and finished products. During the week, the average price of new PP yarn in East China was 7,910 yuan/ton, a significant drop of 389 yuan compared to last week. The price gap between new and old materials continues to narrow, leading packaging stations to pressure prices and limit the collection of waste PP raw materials. The prices of recycled raw materials have also fallen, slightly alleviating the cost pressure on granulation plants, but failing to reverse the downward trend in finished products.

On the supply and plant side, market supply has increased slightly. Some previously shut-down small granulation plants have resumed operations, and the industry’s average operating rate has rebounded to 41%. On the demand side, the market has entered the traditional off-season. Downstream plastic weaving and injection molding sectors have reduced output due to high temperatures, and product manufacturers are only making sporadic purchases to meet essential needs, leading to a continued buildup of recycled pellet inventories in the market. Most small and medium-sized recycled enterprises are operating at 30% to 50% capacity, while large producers have proactively cut load due to insufficient orders. There are no concentrated maintenance shutdowns or large-scale stoppages.

Trading activity and market sentiment are bearish. This week, most on-exchange deals have been small lots of less than 100 tons, while large-scale restocking has almost disappeared. Downstream buyers are staying on the sidelines with cash in hand and pressuring prices when opportunities arise. Recycled processing plants are eager to ship goods, and selling at a discount has become the norm. Most market participants are pessimistic about the short-term outlook, with bearish sentiment dominating the market.

Futures market volatility weighed on spot prices. The main PP2609 contract edged up earlier in the week before dropping sharply, closing at RMB 8,050/mt on July 9, down RMB 364 on the day. The weakening futures market further dampened trading confidence in recycled materials, and the rebound lacked sustainability.

Post-market outlook: In the short term, recycled PP lacks support. The combined bearish impact of weak virgin material prices and the off-season in downstream demand, along with slow inventory destocking, is expected to keep recycled PP prices on a narrow downward trend next week. High-quality transparent material is expected to see relatively limited declines, while mixed-color material will face more pronounced pressure.