"off-peak" peak: Challenges in the Polypropylene Market's Rebound Path

In the first half of September, the domestic polypropylene spot market failed to strengthen as expected. Although the recent rise in international crude oil prices has led to a rebound in polypropylene futures, it has not effectively transmitted to the spot market, reflecting a low acceptance of price increases in the spot market and a weak willingness among traders to follow the price rise. Currently, although the inventory of the two major oil companies has decreased, it remains at a moderately high level. Traders are primarily focused on destocking, with widespread occurrences of price concessions, further suppressing spot prices.

1. Major Factors Affecting the Polypropylene Market:

Favorable news:1.Cost support is enhanced, providing some support to the spot market.

Concerns from investors about Russian energy supply have supported oil prices, leading to an increase in international crude oil prices.PPFutures are up, and the spot market has stopped falling and is slightly rebounding, but the rebound is relatively limited.

2Macro sentiment improvement

The Ministry of Industry and Information Technology has introduced industry growth stabilization plans, including those for automobiles, electronic information, and power equipment, with upcoming plans for non-ferrous metals, steel, petrochemicals, etc., driving the rise in polypropylene futures.

Bearish:1.Supply-side pressure remains

Despite the maintenance of some units, as new capacity gradually comes online (Daxie Petrochemical Phase II units), the spot market supply is ample, which restricts the room for spot price increases.

2.Inventory reduction is slow.

Although recent petrochemical inventories have decreased, they remain at a medium-high level. Traders are primarily focused on actively reducing inventories, and the market phenomenon of offering discounts to facilitate sales is widespread.

II. The Recovery of Rigid Demand is Slow and the Increase in Transactions is Limited

Data Source: Jin Lian Chuang

Since September, the overall price focus of the domestic polypropylene market has shifted downward.9Although new temporary parking facilities were added in the month, domestic production enterprises have not halted their progress, such as the second phase of the Ningbo Daxie Petrochemical facility.45 /The annual production capacity is set to be put into operation, and the supply pressure is difficult to alleviate effectively; ahead of the holiday, only a few downstream users are replenishing their stocks at low prices, while most companies continue to maintain only essential purchases, resulting in limited support from the demand side.

3. About the Future Market

After the peak maintenance period in August,9Although there are temporary parking facilities in place for the month, large-scale maintenance is expected to decrease.9The monthly maintenance loss decreased compared to the previous month; enter“ ”Downstream major industries such asBOPPThe operating rates of plastic weaving and other sectors have slightly increased compared to the previous period, but they are still below the operating levels of previous peak seasons. Overall, it is expected that next week...PPThe granular material market is experiencing narrow and weak fluctuations.