Weak Cost Support and Intensifying Demand Differentiation May Lead PP Products Industry into Adjustment Period

[Introduction] Recently, crude oil prices have continued to decline, and PP futures are fluctuating in the market. The cost support for the PP products industry is limited, leading to a steady decline in prices in downstream industries and a downward trend in industry profits. Looking at different downstream industries, the demand in the automotive and healthcare sectors remains decent, while the packaging market is experiencing a decline in order demand. The demand for daily necessities such as lunch boxes, milk tea cups, and transparent packaging remains stable. In the coming week, the procurement by end customers will return to basic needs, and market trading activity is expected to decrease compared to this week.

Current macro factors are gradually weakening their impact on the market. Fundamentally, the supply-demand contradiction is still difficult to resolve in the short term, but demand remains rigidly supported, limiting further downward price movement. The amount of maintenance in the supply side remains high, but the overall supply pressure has not been effectively released, continuing the high supply pattern. Sustained high supply levels will continue to exert pressure on the short-term market, and spot prices are expected to maintain a fluctuating trend. This week, polypropylene prices have slightly decreased, with the national average price for filament at 6,447 yuan/ton, down 19 yuan/ton from last week, a decline of 0.29%.

This week, the average operating rate of the domestic polypropylene downstream industry increased by 0.14 percentage points to 53.28%.From the demand side, the concentrated procurement period of previous e-commerce activities has passed, leading to a slowdown in demand for packaging industries such as CPP and woven bags. As the weather turns cooler, the demand for medical and health products such as masks and surgical gowns remains stable. Additionally, there is a rise in new orders for cold-resistant fabrics and seedling fabrics, resulting in a seasonally high demand for PP non-woven fabrics. Furthermore, with the increase in year-end promotional activities, there is noticeable support for automotive materials demand in the modification industry. As packaging and home goods gradually enter the off-season, it is expected that the PP products market will gradually cool down next week, with end-user factories primarily conducting transactions on a just-needed basis and making small orders as needed. The industry's operating rate may experience a slight decline.

Recently, orders in the downstream polypropylene products industry have increased by 1.23% compared to the previous period, with the average order duration being around 9.02 days. Supported by the upcoming Double Eleven shopping festival, the demand for packaging such as BOPP, CPP, and woven plastics is relatively strong, and the stocking demand from terminal factories is high, leading to an upward trend in downstream industry orders. It is expected that after the conclusion of the shopping festival, demand may slightly decline.

Unit: %, 10,000 tons, days, RMB/ton

The polypropylene market is expected to trend weakly downward next week, with insufficient cost support and rising market supply-demand conflicts. As e-commerce activities conclude, market demand is gradually weakening. Downstream product manufacturers are replenishing stock mainly based on rigid demand, with little interest in large-scale hoarding. The end market order situation in the plastic woven, CPP, and injection molding industries continues to cool down, and trading sentiment appears somewhat sluggish. Demand for BOPP, PP non-woven fabrics, and modified PP shows slight support, with market transactions remaining relatively stable. In terms of PP pipes, orders for water supply, drainage, and floor heating pipes may increase, and there is a possibility of a rise in industry operations.

Overall, although the Double Eleven shopping festival has ended, terminal demand may decline in the short term. However, with the support of holidays such as Double Twelve, New Year's Day, and the Spring Festival, terminal demand is expected to increase.