According to the Commodity Market Analysis System of SunSirs, the domestic PP market rose in mid June, with most brand products experiencing price increases. As of June 18th, the mainstream offer price for wire drawing by domestic producers and traders is around 7,461.67 RMB/ton, a rise or fall of +0.92% compared to the price level at the beginning of June.
In terms of raw materials: In early June, the geopolitical situation in Eastern Europe was tense. Recently, the situation in the Middle East has taken a sharp turn for the worse, increasing the risk of crude oil supply. At the same time, the seasonal increase in fuel demand has boosted the market, resulting in strong price performance. However, domestic propane prices have weakened due to weak expectations from overseas Saudi Arabia, and cost support for PDH manufacturing enterprises has weakened. In terms of propylene, there are some companies with low inventory levels, coupled with downstream consumption following suit and accelerating, resulting in a halt to the decline and rise in prices. Overall, the recent prices of various PP raw materials have risen more or fallen less, which has strengthened the overall support for PP costs.
Supply side: In mid June, the load of domestic PP enterprises increased narrowly, and the market supply remained abundant. Overall, the current industry's overall load level has slightly increased by about 1% compared to 78% in the first half of the year. The weekly average total output has risen to 775,000 tons, and the total domestic inventory of 785,000 tons has been partially absorbed. Although there are maintenance plans for Zhejiang Petrochemical and Zhenhai Refining in the future, the production of Zhenhai Refining's fourth line on June 19th is imminent, and local supply pressure has increased, basically smoothing out the maintenance benefits. At the same time, including enterprises such as Zhenhai Fourth Line and Yulong Petrochemical, a total of 1.4 million tons of new production capacity was put into operation this quarter, severely limiting the future supply pattern. Overall, there is still some suppression on the spot price of PP by the supply side.
In terms of demand: In mid 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 on-site situation remains in a state of urgent need, with a focus on on-demand use. In terms of plastic weaving, the consumption level of terminal enterprises is already at the off-season level, and downstream PP enterprises in China are struggling to start production. There is also a certain shrinkage in materials used in construction, agriculture and other fields. On site new orders tend to focus on scattered small orders and contract deliveries, resulting in a return to flat supply liquidity and a further slowdown in PP demand release speed. The recent news of the second round of economic and trade consultations between China and the United States has strengthened the mentality of industry players and stimulated the market to release some of the demand for replenishment. Overall, the performance of the PP demand side in mid June was average.
In mid June, the domestic PP market prices rose. Fundamentally speaking, the prices of upstream raw materials have generally increased, which has strengthened the overall support for PP. Industry inventory has been slightly reduced, but supply has significantly increased. Consumption has entered the off-season level. When the positive news and cost side are intertwined with the negative impact of supply and demand contradictions, it is expected that the PP market will digest the previous gains in the short term and enter a consolidation market. It is recommended to closely monitor the industry supply situation.
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