According to the Commodity Market Analysis System of SunSirs, the domestic PP market was consolidating and operating in early June, with some brand products experiencing narrow price reductions. As of June 11th, the mainstream offer price for wire drawing by domestic producers and traders is around 7,378.33 RMB/ton, a decrease of -0.20% compared to the price level at the beginning of June.
In terms of raw materials: In early June, the geopolitical situation in the Middle East and Eastern Europe became tense, and the risk of crude oil supply increased. At the same time, the increase in seasonal demand has boosted the market, resulting in strong price performance. The decoupling of domestic propane trade is gradually being lifted, supply is relaxed, and cost support for PDH manufacturing enterprises is weakening. There is a certain degree of loose supply in the propylene sector, coupled with average digestion speed, resulting in weak and volatile prices. Overall, the prices of PP raw materials have been fluctuating recently, with mixed ups and downs, and overall support for PP costs is still acceptable.
Supply side: In early June, the load of domestic PP enterprises increased narrowly, and the market supply remained abundant. Overall, the current industry's overall load level has fluctuated upwards to over 78% compared to around 77% at the end of May, with an average weekly total output of nearly 760,000 tons. There are maintenance plans for enterprises such as Yanshan Petrochemical and Zhenhai Refining in the interval. On the other hand, the new production capacity of 1.4 million tons in this quarter is approaching, and the expansion of Yulong Petrochemical and other companies is basically smoothing out the maintenance benefits. The expectation of loose supply in the future is obvious. The total domestic inventory has leveled off at a high level to around 820,000 tons. Overall, there is still some suppression on the spot price of PP by the supply side.
In terms of demand: In early June, the demand side of PP continued to be weak, and on-site trading gradually entered the traditional off-season. Merchants have hardly seen any advance stocking operations, and the market maintains a weak demand situation, with a focus on on-demand use. The consumption level of terminal enterprises in the field of plastic weaving is already at the off-season level. With the passing of the small peak period of materials used in construction, agriculture and other fields in the early stage, the release speed of PP demand has further slowed down. The news of the temporary suspension of tariffs between China and the United States in the early stage stimulated market sentiment, and consumption briefly increased. At present, its impact has been basically digested, with downstream PP enterprises in China experiencing sluggish production, new orders on site, and a tendency towards scattered small orders or contract deliveries, resulting in a return to flat supply liquidity. Overall, the demand side of PP performed poorly in early June.
The domestic PP market price consolidation in June was weak. Fundamentally speaking, the prices of various upstream raw materials have fluctuated, and the overall support for PP is still acceptable. The industry has abundant supply, inventory levels have leveled off, and consumption has entered the off-season level. The current macroeconomic policies have exhausted their positive effects, and the market has returned to being dominated by supply and demand. It is expected that the PP market will continue to weaken and consolidate in the short term. It is recommended to closely monitor the new production situation in the industry.
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