According to the Commodity Market Analysis System of SunSirs, the domestic PP market fluctuated and fell in mid August, with some brand products experiencing price reductions. As of August 20th, the mainstream offer price for wire drawing by domestic producers and traders is around 7,215 RMB/ton, a decrease of -1.03% compared to the price level at the beginning of July.
In terms of raw materials: In mid August, the geopolitical situation in Eastern Europe eased, and market concerns about unstable crude oil supply weakened. At the same time, OPEC+ production expectations were clear, and there were certain negative factors in international oil prices. The trend of propane follows that of crude oil, and the cost support of PDH manufacturing enterprises has declined. The supply of propylene has tightened and then loosened, coupled with insufficient demand follow-up, causing prices to rise first and then fall synchronously within the range. Overall, the prices of PP raw materials within the range show a loosening trend in cost support.
Supply side: In mid August, the operating rate of domestic PP enterprises remained stable with a small increase. The overall industry load level within the range has narrowly increased to 78%, with a weekly average total output of over 780,000 tons. In ten days, although the first line of Langang Petrochemical and the second line of Dushanzi Petrochemical were overhauled, some production lines of Zhongke Refining and Chemical and Yanchang middling coal were restarted, and the production of a 900,000 ton new production line in Daxie, Ningbo was close to being put into operation. The market supply trend was clear, severely limiting the supply side support. The current on-site supply remains abundant, with inventory levels approaching over 830,000 tons and slow digestion. Overall, there has been no improvement in the support for spot prices from the PP supply side, and there are still many pressures.
In terms of demand: In mid August, the trend of low season consumption of polypropylene continued, and the demand for PP remained weak, resulting in a quiet trading atmosphere on the market. Merchants have a low willingness to stock up in advance, with a focus on scattered small orders and contract delivery for new orders on site, and a preference for on-demand operations. The liquidity of the supply is average, and the release speed of PP demand remains slow. As we approach the end of August, the peak and off peak seasons are about to change. Although downstream enterprises have low loads, there is a potential willingness to build warehouses in areas such as plastic weaving, construction, and agriculture. However, the current macro guidance is not clear, and in the pattern of weak exports and domestic demand, the demand side of PP does not provide strong support for spot prices.
In mid August, the domestic PP market prices fluctuated and fell. Fundamentally speaking, there are signs of loosening in the upstream raw material market, and overall support for PP has weakened. The industry load is high, stable, and slightly rising, with expectations of loose supply in the future, and consumption is at a low season level. The current supply-demand contradiction is difficult to improve, and the mentality of industry players is bearish. It is expected that the PP market will continue to remain stagnant in the short term.
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