According to the Commodity Market Analysis System of SunSirs, the domestic PP market rose at the end of June, with most brand products experiencing price increases. As of June 25th, the mainstream offer price for wire drawing by domestic producers and traders is around 7,493.33 RMB/ton, a decrease of +1.35% compared to the price level at the beginning of June.

In terms of raw materials: Since early June, the geopolitical situation in Eastern Europe has remained highly tense. The market is increasingly concerned about the risk of crude oil supply. At the same time, the seasonal increase in fuel demand has boosted the market synchronously. However, the expected ceasefire agreement between Israel and Iran recently reduced the risk of oil supply disruptions in the Middle East, and oil prices quickly fell after rising. Due to the transmission of the previous rise in crude oil prices, propane and propylene in China have now risen to high levels, and the cost support for PDH and propylene production enterprises is still strong. Overall, the recent prices of PP raw materials have provided strong support for costs, and it is recommended to closely monitor international oil prices in the future.

Supply side: At the end of June, the load of domestic PP enterprises fluctuated narrowly, and the market supply remained abundant. Overall, the current industry's overall load level has been slightly adjusted to around 78.6% compared to nearly 80% in the middle of the year. The weekly average total production has increased to over 780,000 tons, and domestic inventory has accumulated to over 820,000 tons. The Zhenhai Refining and Chemical Fourth Line was put into operation on June 19th within the interval. At the same time, both Zhenhai Line and Zhejiang Petrochemical have reduced their production capacity and basically flattened their production capacity. However, in addition to the 500,000 tons/year new production capacity of Zhenhai Fourth Line that has already been put into operation, and the presence of Yulong Petrochemical and other enterprises in the fourth quarter, a total of 900,000 tons of new production capacity has been put into operation, 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: At the end of 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 news of the second round of economic and trade consultations between China and the United States in the early stage has strengthened the mentality of some industry players and stimulated the market to release some of the demand for replenishment. However, in the context of weak export and domestic demand, the demand side of PP does not provide sufficient support for spot prices.

At the end of June, the domestic PP market prices rose. Fundamentally speaking, there are significant fluctuations in the upstream of the far end, and propylene propane is still at a high level, indicating strong overall support for PP. Industry inventory has rebounded and supply remains abundant. Consumption is at a low season level. The current cost side benefits are intertwined with the negative effects of supply and demand contradictions, and the market speculation atmosphere has fallen. It is expected that the PP market will continue to digest the previous gains in the short term and enter a consolidation market. It is recommended to closely monitor the cost situation.

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