According to the SunSirs commodity market analysis system, the domestic PP market saw a volatile decline in July, with some grades experiencing price reductions. As of July 31, the mainstream quoted price for wire drawing by domestic manufacturers and traders was around 7,278.33 RMB/ton, a -2.41% decrease from the beginning of July.

Raw Materials:

During July, tensions in the Middle East eased, and the announcement of OPEC+'s production increase plan put international oil prices under pressure and volatility. Market concerns about crude oil supply disruptions have eased, leading to price fluctuations. Furthermore, propane consumption was sluggish, and following the decline in crude oil prices, prices are currently at a low level, reducing cost support for PDH producers. Propylene saw significant production starts and resumptions, putting downward pressure on prices. Overall, July's PP raw material market provided weak cost support.

Supply:

In July, domestic PP producers alternated between maintenance and resumption of work, while also experiencing capacity releases. Companies such as Jingbo, Yanchang China Coal, Dalian Petrochemical, and Tianjin Bohai Chemical have all reduced their loads. Meanwhile, the launch of the Zhenhai and Yulong Lines 4 has increased the loads of Zhejiang Petrochemical, Quanzhou Guoheng, and Jiutai Group. Meanwhile, the start-up of the China Coal Mengda project is approaching. Overall, the industry's overall load level fluctuated narrowly around 77%, with an average weekly output of approximately 770,000 tons. Supplies remained ample, while inventory levels gradually increased to over 810,000 tons, with slow destocking. Approximately 500,000 tons of new capacity will come online in the second half of the year, severely constraining the forward supply landscape. Overall, the improvement in PP supply-side support for spot prices has been very limited.

Demand:

July is traditionally a low season for polypropylene consumption, and PP demand remained weak, resulting in quiet trading. Traders were largely refraining from pre-stocking, maintaining a demand-driven, on-demand environment. In the plastic weaving sector, end-user consumption showed a significant seasonal dip. Domestic PP downstream companies operated at sluggish levels, and material consumption in sectors such as construction and agriculture also remained low and flat. New orders are primarily small, sporadic orders and contract deliveries, resulting in sluggish supply liquidity and slow PP demand growth. Currently, macroeconomic guidance is unclear, and with both exports and domestic demand weak, PP demand is providing little support for spot prices.

Market Forecast

Domestic PP market prices fluctuated and declined in July. From a fundamental perspective, upstream raw materials are generally weak, providing limited support for PP. Industry load is generally stable with minor fluctuations, and ample supply is expected in the future, with consumption remaining at off-season levels. The combined effects of supply and demand imbalances and declining costs have led to a bearish sentiment among industry players, and we anticipate a continued stagnant PP market in the short term.

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