Polypropylene Margins Improve, Market Expected to Enter Rebound Phase

Introduction: 9 The import cost of propane has increased, with a cost of 4,599 yuan/ton based on the CP benchmark, reflecting a month-on-month increase of nearly 7%. In contrast, since entering September, the spot price of polypropylene has continued to decline, with an average price decrease of 2.46% in September. The downward transmission of costs is not smooth, leading to increased shutdowns due to cash flow losses in PDH enterprises. As of September 15, 2025, the capacity utilization rate of PDH-based PP enterprises decreased to 66%, down 14% from the monthly average in August (80%).

Under the backdrop of polypropylene destocking, spot prices have rapidly declined, with the petrochemical sector leading the market downturn.

From the perspective of price trend changes, throughout the entire yearPolypropylene pricesThe trend remained steady, but since September, the price decline has widened. This is mainly due to the full commissioning of CNOOC Daxie Phase II plant, which has exacerbated the supply-demand imbalance in the Zhejiang region and depressed spot prices. In addition, with the National Day holiday in October approaching, companies, concerned about future inventory risks, have been reducing prices to destock. As shown in the figure, ex-factory prices from Donghua Energy (Ningbo) and Sinopec (Zhong'an United) have led the market decline.

Polypropylene and raw material prices diverge, leading to a decline in profitability for some facilities that rely on external sourcing.

From the cost-profit comparison chart above, the recent price trends of feedstocks such as propane/propylene have diverged from that of PP. The unit loss for PDH-based PP has reached -833 yuan/ton, with the profit level down 86% compared to the August monthly average (-448 yuan/ton). For PP produced from outsourced propylene, the unit loss has reached -426 yuan/ton, down 274% compared to the August monthly average (-114 yuan/ton).

With propane andAcrylic priceThe continuous increase has significantly compressed the profit margins of polypropylene production enterprises. Some private companies, in an effort to improve profitability, have adopted strategies such as shutdowns and selling propylene externally. Against this backdrop, the number of temporary shutdowns and maintenance in the polypropylene industry has increased, and the favorable factors on the supply side are gradually being realized.

Inventory passes down smoothly; petrochemical inventory is successfully transferred to intermediaries.

From the changes in the inventory of the two polyolefins, it can be seen that the inventory changes of enterprises show obvious cyclicality. Before the National Day holiday, production enterprises mostly reduce their inventory to the lowest level of the year. During July and August, market willingness to hold inventory was low. Coupled with the commissioning of Zhenhai Refining & Chemical's 4PP, the capacity and output of the two polyolefins increased, resulting in inventory levels higher than those in the same period in previous years.

Entering August, production enterprises are experiencing increasing inventory pressure and are actively reducing prices to clear stock. As shown in the figure, production enterprises' inventory is transferring to mid- and downstream segments, with traders taking on part of the resource transfer, thereby alleviating the inventory pressure of production enterprises.

Based on the above analysis, petrochemical enterprises accelerated shipments in the early stage to seize market share, resulting in a rapid decline in PP spot prices. Currently, the spot price discount to futures has reached 200 yuan/ton. At the absolute price level of 6,800 yuan/ton for polypropylene, downstream production is gradually entering a profitable range, while upstream enterprises are showing a marked decrease in production enthusiasm. As the pattern of supply contraction and demand recovery takes shape, the fundamental pressure on polypropylene is alleviated in the short term, and there is upward momentum in the market. Looking ahead, close attention should be paid to the actual recovery progress of downstream demand, as well as uncertainties such as fluctuations in crude oil prices and macro policy adjustments. It is expected that in late September, polypropylene spot prices are likely to rebound and operate in a relatively strong range of 6,900-7,000 yuan/ton.