Pp products industry operating rate rises as policy and industry normalization support future growth

Introduction:RecentCrude oilDecline,PP futuresThe weak fluctuations and lack of momentum in raw material price increases provide limited support to the PP products industry from the cost side. On the demand side, with the arrival of the traditional peak season in September and October, market demand gradually warms up, and enterprises show a fair level of purchasing enthusiasm, with film enterprises offering more concessions on actual transactions. Driven by the back-to-school season, the demand for modified PP, PP transparent materials, and daily injection molding increases, while the PP pipe and plastic weaving industries see improved orders stimulated by agricultural activities. Overall, the operating rate in the PP products industry shows an upward trend. In the future, with the benefits from national policies and the normalized development of the agriculture and construction industries, the market demand for related supporting products will be directly driven, thereby promoting continuous improvement in the operating rates and order situations in the PP products industry.

Table 1: Overview of Polypropylene Product Operating Rates

Data source:Longzhong Information

The average operating rate of the domestic downstream polypropylene industries (including woven bags, injection molding, BOPP, PP pipes, PP non-woven fabrics, CPP, PP transparent, and modified PP, totaling 8 downstream industries) increased by 0.49 percentage points to 50.23%. BOPP companies are appropriately restocking according to orders, and the number of order days has increased; the automotive and home appliance industries are driven by policies, consumption upgrades, and product innovation, resulting in a decent market turnover. With the retreat of high temperatures, market sentiment has improved, supported by old house renovations and rural water supply network upgrades. Although terminal demand in the CPP industry has slightly warmed, the increase in new orders is limited and has not significantly improved, with the industry maintaining stable operations. Overall, supported by the traditional peak demand season, most orders in the polypropylene products industry show positive expectations.  

During the week, futures showed a fluctuating trend. Previously halted PP production units gradually restarted, leading to an overall loose supply. The raw material market saw narrow adjustments in offers, with insufficient market drivers, providing limited support to CPP. According to research, with the arrival of the traditional peak consumption season, some film companies have begun stocking up for the Mid-Autumn Festival, and demand in core application areas such as food and packaging in the end market is gradually being released. However, the strength of demand recovery remains limited. Orders for small and medium-sized film companies are mainly for essential replenishment, with limited new orders, not forming a concentrated surge in order demand. Companies need to maintain cautious procurement, with production units mostly operating at normal capacity. It is expected that the upcoming National Day and Mid-Autumn Festival will boost the market, and there is a continued positive outlook for the CPP market. In the short term, prices are expected to fluctuate slightly.  

Recently, BOPP prices have been stable with a slight decline. Crude oil prices have fallen, PP futures have declined, the focus of the spot market has bottomed out, and petrochemical ex-factory prices have also dropped. The cost support is weak, and film factory ex-factory prices have decreased steadily by 50-100 yuan/ton, with the mainstream market price decreasing by 50 yuan/ton in some areas. As raw material prices continue to decline, BOPP mainstream prices tend to stabilize, and film factory profits have increased by 46.03% month-on-month. Downstream and traders are placing orders moderately. Although it is the traditional peak demand season, there has been no news of concentrated restocking. Due to weak raw materials and the gradual release of new BOPP production capacity, supply pressure in the market is expected to increase in the future. The market sentiment is cautious, and restocking is mostly for just-in-time small orders. Some equipment that was previously shut down due to maintenance and the September 3rd parade has now resumed operations. In the short term, film prices may remain largely stable with minor fluctuations.

The recent average operating rate of the domestic PP nonwoven fabric industry is at 36.80%, showing a slight increase of 0.12% compared to the previous period, with an overall trend of slight recovery. The recent low and fluctuating polypropylene prices provide limited support for PP nonwoven fabric. Although there is a slight increase in demand for end products such as women's menstrual pants and adult diapers, the domestic PP nonwoven fabric industry is experiencing overcapacity, with intense competition among enterprises. The industry's overall operating rate remains low, with weak support from the cost side. Additionally, PP nonwoven fabric companies are focusing on cost reduction and efficiency improvement, adopting a lean inventory model for raw materials, and mainly replenishing stock as needed.

The recent operating rate of the daily-use injection molding PP industry is at 57.98%, up by 0.54% compared to last week. There are favorable macroeconomic policies, but the supply pressure brought by new capacity expansion has not yet eased, and the market lacks strong drivers for a unilateral trend. As a result, the price of the polypropylene market is weak and declining, with the price of raw materials for daily-use injection molding PP falling. On the demand side, there is a rebound trend with new orders gradually following up, leading to an increase in the operating rate of the daily-use injection molding PP industry.

The demand in the home appliance and automotive industries is on the rise, driven by policy incentives, consumption upgrades, product innovation, and the growth of niche demands. Sales of products like floor cleaning machines and washing machines are increasing, and the penetration rate of smart home appliances has exceeded 60%, providing significant support for the operation of the modified PP industry. With the arrival of the traditional peak season for the industry, operational rates have increased by 1.45% month-on-month to 61.93%. However, prices are negatively affected by cost pressures.

Future Prediction:As the traditional peak season of September arrives, the demand for polypropylene products has improved compared to earlier periods, with a slight increase in orders. It is expected that the upcoming Mid-Autumn Festival and National Day holidays will further boost demand compared to previous periods. Additionally, different sub-segment scenarios are showing varied demand characteristics. From the perspective of end-consumption scenarios, after the start of the school year for primary and secondary schools, the demand for instant foods such as cold drinks and takeaways has somewhat decreased, whereas the demand for PP transparent materials and packaging materials for stationery products has simultaneously increased. In mid-September, the main production areas in North China enter a critical period for autumn harvest and sowing, significantly increasing the demand for woven bags, fertilizer bags, and PP material irrigation tools for corn harvesting and farmland irrigation operations. Furthermore, the home appliance and automotive industries have seen a slight increase in orders due to policy subsidies, driving up the consumption of raw materials by modification companies. In summary, there is a demand expectation for the polypropylene products industry in the short term, with the possibility of a continuous increase in orders.