According to the Commodity Market Analysis System of SunSirs, the domestic PP market was flat in the first half of June and rose in the second half, with most brand products experiencing price increases. As of June 30th, the mainstream offer price for wire drawing by domestic manufacturers and traders is around 7,466.67 RMB/ton, a rise or fall of +0.99% compared to the price level at the beginning of June.

In terms of raw materials: In early June, the geopolitical situation in Eastern Europe 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 ceasefire agreement between Israel and Iran was reached at the end of the month, and the risk of oil supply interruption in the Middle East region was simultaneously reduced. Oil prices quickly fell after rising. Due to the transmission of the rise in crude oil prices, the domestic propane sector has now risen to a high level, and the cost support of PDH manufacturing enterprises has strengthened, while the propylene sector has fallen after rising. Overall, the prices of PP raw materials in June have provided strong support for costs, and the level of geopolitical tension in Europe may fluctuate in the future. It is recommended to closely monitor international oil prices.

Supply side: In June, the load of domestic PP enterprises fluctuated and increased, while the market supply remained abundant. Overall, the current industry's overall load level has risen to nearly 80% compared to 77% at the beginning of the month. The weekly average total production has increased to over 780,000 tons, and domestic inventory has been partially digested at around 600,000 tons. The Zhenhai Refining and Chemical Fourth Line in the area will be put into operation on June 19th. At the same time, Zhenhai Line, Yanshan Petrochemical, and Zhejiang Petrochemical have all reduced their production capacity and basically flattened their production capacity. Overall, the supply side's support for PP spot prices in June was ambiguous and the intensity was average. 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 long-term supply pattern.

In terms of demand: In June, the demand for 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 within the month has strengthened the mentality of some businesses 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.

In June, the domestic PP market prices first remained flat and then rose. Fundamentally speaking, the upstream of the far end has experienced significant fluctuations after rising, and overall support for PP remains strong. The industry's inventory has been partially digested, and the 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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