According to the Commodity Market Analysis System of SunSirs, the domestic PP market maintained a weak operation in October, and prices of various brand products were mostly lowered. As of October 16th, the benchmark price for PP wire drawing offered by SunSirs was 6,790 RMB/ton, a decrease of -1.88% compared to the price level at the beginning of October.
In terms of raw materials: Since October, the tense geopolitical situation in Eastern Europe has not changed, and the Federal Reserve's interest rate cuts have boosted the crude oil market. On the other hand, OPEC+ has launched a new round of production increase of 1.65 million barrels per day, and the market is still concerned about the long-term risk of oversupply. The easing of the situation in the Middle East, coupled with weakened demand from the United States, and the issue of US trade barriers, have dragged down global economic and demand expectations, leading to a rapid decline in international oil prices. Recently, there has been insufficient digestion of propylene, leading to a rapid decline. Fortunately, inventory is relatively controllable, with a slight rebound near mid month. After the double festival, the supply of propane tightened, and the market rebounded due to insufficient trading and external market declines, resulting in a mid month price drop. Overall, the prices of PP raw materials have fluctuated, providing average cost support.
Supply side: The operating rate of domestic PP enterprises fluctuated in the first half of October, with limited overall changes. As of the time of writing, the overall load level of the domestic industry is 77%, which is comparable to the operating rate at the end of September. The weekly average total output is over 770,000 tons. The trend of loose supply in the future is clear, which severely limits the support from the supply side. The current on-site supply remains abundant, with inventory levels accumulating at a high level of over 820,000 tons. Overall, the PP supply side has poor support for spot prices.
In terms of demand: The first half of October is still in the traditional peak season range for polypropylene, although the materials used in areas such as plastic weaving and agriculture have improved to some extent in the early stage. There is also an increase in new orders in the field of packaging film materials, but the trend of market momentum is limited. Moreover, the positive news of improved market trading atmosphere has been smoothed out by many negative factors. The announcement of the Federal Reserve's interest rate cut and the US tariff crisis have both dragged down market expectations. In addition, the low load on downstream enterprises and slow digestion of accumulated inventory during the National Day holiday have made it difficult to realize the peak consumption of PP, and at the same time, there is insufficient support for the demand side.
In the first half of October, the domestic PP market prices remained weak and fell. From a fundamental perspective, the upstream raw material market is fluctuating, with average overall support for PP. The industry load is expected to remain high with a narrow adjustment, and there are expectations of loose supply in the future. The improvement in consumption is limited, and the market lacks positive guidance. There is no obvious peak season feature in the current market, and there is significant resistance to PP's upward trend. It is expected that the weak adjustment trend may continue.
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