Supply delay vs. slow demand: Can the PP market break through the awkward situation?

Recently, PP futures have stopped falling and turned positive, which has somewhat boosted market sentiment, leading traders to tentatively raise their prices slightly. On the supply side, the ramp-up of new production facilities has slowed down, and there are concentrated maintenance schedules for PP production units, primarily large petrochemical plants with longer maintenance periods, which alleviates supply pressure for the time being. On the demand side, although downstream operating rates are steadily increasing, the rising raw material prices have suppressed the purchasing enthusiasm of downstream factories, leading to transactions mainly at lower prices and limited demand support. As of today, the average weekly price for wire drawing in East China is 7365 yuan/ton, an increase of 40 yuan/ton compared to last Friday, reflecting a rise of 0.55%.

Supply: The operating rate of domestic polypropylene plants has slightly increased, currently at 78.03%, up 0.11 percentage points from last Thursday and up 3.09 percentage points year-on-year. The supply of new installations is slowing down; additionally, multiple polypropylene plants such as Pujie Energy Chemical, Zhongjing Petrochemical, and Beihai Refining are still undergoing shutdowns, which has eased the supply pressure temporarily.

Demand: Recently, downstream polypropylene product enterprises have been experiencing poor profit margins, with an overall operating rate between 46.00% and 56.51%. In terms of plastic weaving, the orders from the agriculture and construction industries provide good support for plastic weaving manufacturers, and the operating enthusiasm of enterprises is relatively decent. For plastic films, the market trading atmosphere is average, and there is still supply pressure in the industry. Most downstream factories mainly consume their previous raw material inventory, maintaining a selective low-demand replenishment.

Supply pause VS slow demand recovery, how will the future trend of the PP market develop? Can it alleviate the awkward situation and continue the upward trend? Next, let's analyze the fundamental situation one by one: First, the international crude oil prices are expected to fluctuate within a range next week, with general cost support. As the end of the month approaches, with the progress of the two oil assessments, it is expected that after the inventory depletion, there will be a slight increase. On the supply side, although some production lines at Donghua Energy Ningbo and Zhongjing are still shut down, the number of new maintenance facilities is relatively low, and facilities like Zhejiang Petrochemical are planned to restart, so a short-term supply increase is expected. However, from a regional perspective, in April, the Dalian Hengli 200,000-ton unit, Daqing Refining and Chemical 300,000-ton new unit, and Liaoyang Petrochemical 300,000-ton unit in Northeast China all have maintenance plans, with the longest maintenance duration being about one month. It is recommended that businesses closely monitor the market for thin-walled and some copolymer, pipe prices. On the demand side, the overall demand from downstream manufacturers has been generally weak recently, with poor orders for daily necessities and weak transactions in homopolymer injection. Although there has been a slight improvement in woven bag orders, the increase in demand is not significant. At the same time, in April, companies may enter a concentrated maintenance season, which still provides effective support for the market, and the supply-demand conflict is not significant in the short term.

Overall, although there are not significant contradictions in the fundamentals, there is still no strong and effective positive support in the market. Macroeconomic news is sparse, and market participants are cautious. It is expected that the PP market will mainly experience fluctuations and consolidation in the short term, with little upward momentum.