Entering 2026, the polypropylene industry chain persists in the sluggish market conditions that began in the fourth quarter of 2025. The new year finds the polypropylene sector still grappling with oversupply and weak demand, lacking overall upward momentum and likely to extend its downturn.

Costs Plunge Amid Volatility

Propylene, the core feedstock for polypropylene, failed to deliver its traditional “Silver October” peak demand in 2025. Weighed down by the combined impact of plant maintenance restarts and new capacity releases, producers sustained price concessions, driving the market into a volatile and steep decline.

SunSirs analysts noted that by November 2025, Yangmei Heng Tong and Xintai Petrochemical facilities entered maintenance shutdowns, while propane dehydrogenation units at Ningbo Kingfa, Donghua Energy Zhangjiagang, and Tianjin Bohua gradually resumed operations. Prices continued their downward trajectory, Shandong's propylene market price briefly dropped to 5,600 yuan (per ton, same below), hitting a multi-year low and falling 22% from its 2025 peak.

Subsequently, producers adopted a more proactive stance in supporting prices, leading to a market rebound from its trough. However, starting mid-December 2025, propylene prices resumed their downward trajectory, plunging once again to annual lows.

Data indicates that in Q4 2025, Shandong's average propylene price remained below 6,000 yuan, down 7.44% quarter-on-quarter and 13.81% year-on-year.

Market participants indicate that the primary factor driving the propylene market downturn is excessively rapid capacity growth. China's total propylene production capacity is projected to climb to 77.58 million tons in 2025, representing an estimated growth rate of 10.42%, which further exacerbates the supply-demand mismatch pressure in the industry. Total domestic propylene supply in Q4 2025 is expected to increase by 3.21% quarter-on-quarter and 12.52% year-on-year.

The industry's core contradiction has gradually shifted from “incremental expansion” to “existing capacity competition.”

In the first quarter of this year, 1.9 million tons of new propylene capacity is scheduled to come online. However, cost pressures on propane dehydrogenation (PDH) units are dampening operational enthusiasm, with multiple PDH units announcing maintenance plans, which may provide some support to market supply. Additionally, with propylene prices currently at rock bottom, a slight rebound is possible, though the magnitude and duration remain uncertain.

Supply Remains Ample

In Q4 2025, the polypropylene market continued its downward trend, hitting multi-year lows. Particularly by year-end 2025, high inventories and weak demand prompted upstream petrochemical companies to initiate destocking strategies. On December 23, 2025, East China's polypropylene fiber material price reached 6,080 yuan, marking a decade-low. Compared to the third quarter of 2025, polypropylene prices fell by 8.22% in Q4, and declined by 14.97% year-on-year.

Industry insiders note that positive factors in the polypropylene market remain relatively limited and lack sustainability. While partial plant maintenance and localized logistics disruptions have caused temporary structural shortages, these cannot alter the overall supply-demand landscape. Ample supply and destocking pressures continue to weigh on polypropylene prices. By the end of 2025, companies faced heightened destocking pressures to meet sales targets and inventory metrics, further intensifying market downward pressure.

Supply-side constraints remain the core limiting factor in the current polypropylene market. Throughout 2025, the impact of concentrated new polypropylene capacity releases continued to unfold. Multiple new facilities, including Baofeng in Inner Mongolia and Yulong Petrochemical, have achieved stable production of qualified products. The industry's overall operating rate rose to nearly 80% by the end of 2025, maintaining ample supply. Production volumes showed year-on-year increases: low-melt copolymer up 5%, medium-melt copolymer up 12%, and high-melt copolymer up 16%.

Current polypropylene prices remain relatively low, and some downstream enterprises have temporary pre-holiday restocking needs, which may provide temporary support for prices. However, once the new capacity released in the second and third quarters of this year steadily increases production, the overall supply base will remain substantial. The industry's long-term pattern of loose supply and demand is unlikely to undergo fundamental change, and the market's upward momentum remains insufficient.

Demand Struggles to Gain Traction

As one of the most widely used synthetic resins, polypropylene demand has failed to keep pace with upstream capacity expansion. China's apparent polypropylene consumption is projected to grow by approximately 3% in 2025—a relatively moderate rate—while upstream capacity expands at double-digit speeds. This mismatch in growth trajectories constrains the market's healthy development.

Current polypropylene demand faces multiple constraints: First, the intensifying contradiction between continuous capacity expansion and slowing demand growth has led to fierce homogenized competition in low-end products, continuously squeezing price and profit margins. Second, policy risks arising from changes in the international trade environment have increased operational pressure on export-oriented enterprises. Third, the weakening real estate sector has indirectly impacted downstream polyolefin applications like piping materials, reducing demand support. Fourth, the home appliance sector's projected slowdown in growth by 2025 further dampens polypropylene demand.

Current polypropylene demand faces multiple constraints: First, the contradiction between continuous capacity expansion and slowing demand growth has intensified, with fierce homogenized competition in low-end products squeezing prices and profit margins. Second, policy risks stemming from changes in the international trade environment have increased operational pressure on export-oriented enterprises. Third, the weakening real estate sector has indirectly impacted downstream polyolefin applications like pipe materials, reducing demand support. Fourth, the projected slowdown in the home appliance sector's growth by 2025 further dampens polypropylene demand expansion.

Looking ahead, as the Spring Festival approaches and polypropylene prices remain relatively low, downstream enterprises are expected to engage in selective restocking around mid-January to cover raw material shortages during the holiday period. This will provide temporary demand support. However, lingering fears of further price declines are likely to limit the scale and sustainability of restocking efforts.

Market participants emphasize that limited terminal demand release before the Spring Festival is unlikely to generate significant incremental support. As the holiday approaches, downstream operating rates will gradually decline, marking the official entry into the seasonal slowdown period. This shift will weaken support for upstream raw materials.

As an integrated internet platform providing benchmark prices, on January 13th, the benchmark price of PP (filament grade) according to SunSirs was 6393.33RMB/ton, an increase of 3.62% compared to the beginning of the month (6170.00 RMB/ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.