According to the Commodity Market Analysis System of SunSirs, the domestic PP market gradually rose in January, with significant price increases for various brand products. As of January 31st, the benchmark price for PP drawing offered by SunSirs was 6,720 RMB/ton, with a year-on-year increase or decrease of 8.91% in price level.
In terms of raw materials: At the beginning of the month, the actions of the United States helped significantly boost the international crude oil market, creating a strong atmosphere of speculation in the market. And within the range of risk premium dissipation, the Iranian oil export related industry chain is expected to reduce production due to the impact of sanctions, and oil prices have risen again at high levels, providing strong support for the upstream of PP in the far end. The rise in propylene is mainly driven by tight supply and rising demand, in addition to the increase in raw materials. The shutdown of two PDH units in Qingdao and Yantai has intensified the supply shortage. In the short term, due to high prices, consolidation may be necessary, but in the medium term, there is still room for upward exploration under cost support, pre holiday stocking, and supply maintenance expectations. In terms of propane, the external market remains strong at a high level, boosted by high domestic arrival prices, and the overall focus of the industry remains unchanged. Overall, the prices of PP raw materials are positive, providing strong support for PP costs.
Supply side: The restart and maintenance of domestic PP enterprises in January were generally balanced, with limited changes in overall operating rates. As of the time of writing, the overall load level of the domestic industry is around 75.5%, with little difference from the beginning of the month. The current weekly average total output is over 780,000 tons, and the inventory position is close to 700,000 tons, which has been partially digested. The on-site supply remains abundant. Overall, the supply side's support for spot prices is still acceptable.
In terms of demand: The overall trading atmosphere in the downstream market of the industry has improved. Buyers chasing higher prices have released orders, their willingness to stock up has increased, and refineries are oversold. At the same time, there is a temporary vacuum in the production stage of the future market, which stabilizes the mentality of industry players and strengthens the support for PP from the demand side. But as the Lunar New Year approaches, some terminal enterprises are gradually arranging holidays, and the future production schedule may decline. Subsequently, there may be a demand for year-end fund withdrawal constraints.
The domestic PP market prices gradually increased in January. Fundamentally speaking, the comprehensive support of upstream raw materials on the cost side of PP is strong. Industry load adjustment, with slight improvement in consumption. Pre holiday stocking may gradually weaken in the future, coupled with the fast accumulation of inventory under the large base production capacity. Therefore, it is expected that the PP upward trend may be hindered to some extent.
If you have any enquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.
