Supply-Demand Pressure and Cost Support: Polypropylene (PP) Market Outlook After the 2026 Spring Festival

Lead-in: 2026During the Spring Festival, the international crude oil price fluctuated and rose strongly due to the geopolitical situation in the Middle East, providing a bullish support for the polypropylene market. On the first trading day after the holiday, futures led the rise, and spot prices showed a partial upward trend. The upstream petrochemical manufacturers maintained normal production, but inventory increased significantly, with inventory pressure becoming the main resistance to price increases. The time of terminal factories was uneven, and the transaction in the market was quiet. Facing the game pattern of cost support and weak supply and demand, where will the PP market go in 2026? The following will provide a detailed analysis.

After the Spring Festival in 2026Polypropylene MarketMarket Analysis

Price Comparison of Polypropylene Before and After the Spring Festival (Unit: yuan/ton)

China’s polypropylene (PP) industry has undergone massive capacity expansion and structural reshuffling—a historically disruptive cycle. As of now, domestic PP capacity has reached 49.165 million tons per year. Due to rapid supply-side expansion coupled with demand growth falling short of expectations—a structural mismatch—the average PP market price in 2026 hit a five-year low. Although prices rose modestly post-Spring Festival in 2026, supported by cost pressures and improved macroeconomic conditions, the uptick was limited by heavy inventory burdens at the two major state-owned petrochemical companies (“Liang You”), heightened market caution, sluggish downstream resumption of operations, limited inquiries, and weak trading activity.  

After the Spring Festival, the market was mainly influenced by the rise in crude oil prices during the holiday, and there are still expectations for policies after the Two Sessions. Coupled with the plan for a meeting between high-level officials from China and the United States at the end of March, which may boost market sentiment, the macroeconomic support is strong, leading to a slight increase in prices. However, the resumption of work downstream is delayed, and market inquiries are limited. There are a few transactions at low prices, and the market participants are cautious. As of February 24, the national average price of drawing silk was 6,644 yuan/ton, an increase of 10 yuan/ton, or 0.15%, compared to before the holiday.

II. Supply and Demand Fundamentals Analysis for 2026

Screenshot As of February 24, the combined polyolefin inventory of the two major oil companies stood at 940,000 metric tons, up by 480,000 tons or 104.35% compared to pre-holiday levels. During the Chinese New Year holiday, most producers maintained normal operations while market participants were away on vacation, leading to a significant inventory buildup. On the first trading day after the holiday, inventories at these two oil companies rose sharply on a week-over-week basis. Additionally, post-holiday, domestic trader sample companies saw a typical inventory accumulation due to halted sales during the holiday. Downstream operations resumed slowly, impeding market transactions and hindering the downstream flow of raw materials. Future demand recovery and its pace will need close monitoring.

2026 Annual New Capacity Expansion Enterprises of Polypropylene

  2026 The domestic polypropylene (PP) capacity is expected to increase by 5.7 million tons in the year, with very few new production lines coming online before September. The expectation of tight supply and recovering demand in the first half of the year may drive a market trend. The expansion of capacity for the year will mainly be concentrated in the East China, Northwest, and North China regions. If the new facilities are successfully commissioned as planned, the total domestic PP capacity will rise to 54.865 million tons. Starting from 2026, the industry will gradually enter a cycle of structural optimization. As outdated capacities continue to exit, the growth rate of domestic polypropylene supply is expected to slow down to 6.75%, and gradually fall below the demand growth rate. At that time, the supply and demand balance of the industry will continue to improve, and the market is expected to gradually enter a new phase of supply and demand rebalance.

2026 During the Spring Festival, the downstream industries maintained low levels of operation. Although the Spring Festival fell later than usual, the recovery of production capacity was limited due to factors such as a severe export situation and weak domestic demand stimulation. It is understood that after the holiday, the downstream industries operated at low levels, with the terminal market generally focusing on clearing accumulated finished goods inventory, and new orders remained limited. Factories showed a lack of enthusiasm in purchasing raw materials.

III. Market Outlook

Domestic Polypropylene Upstream and Downstream Industry Sentiment and Expectations Survey

According to a survey of 241 sample enterprises—including upstream producers, trading companies, downstream product manufacturers, and futures companies—industry participants hold divergent views on the post-holiday market: 15.35% are bullish, 19.09% are bearish, and the majority—65.56%—expect prices to remain stable. The minority bullish view stems primarily from the upcoming Two Sessions, which are expected to provide strong macroeconomic support, and from rising temperatures that will spur the gradual resumption of urban infrastructure development, industrial activities, and construction projects—significantly boosting demand for polypropylene. Conversely, the bearish camp argues that post-holiday inventory accumulation, trade distributors prioritizing discounted sales, delayed downstream plant restarts, limited order volumes, and heightened caution among market participants will collectively lead to weak market performance in the near term.

2 In mid-month, the Spring Festival holiday is interspersed, and after the holiday, inventory pressure increases while downstream orders have not yet recovered. High-priced raw materials will constrain the enthusiasm of downstream buyers. After the post-holiday price increase is consumed, under the constraints of supply and demand pressure, the market price will show a downward trend.

3 In March, downstream operations gradually resumed, accompanied by restocking of raw materials, resulting in more positive factors supporting market prices. By April, downstream operations have largely stabilized, and with supportive government policies, export conditions have improved, creating more opportunities for price increases. However, uncertainties in the global trade environment remain a concern, potentially dampening domestic demand and limiting the market's upside potential.