In late April, the domestic polypropylene (PP) market exhibited a pattern of internal and external divergence, characterized by a sharp rise in exports, persistently weak domestic demand, support from high costs, and a decline in downstream operating rates. March export volumes reached a record high for a single month in recent years, effectively alleviating pressure on domestic inventories; however, operating rates in downstream sectors such as woven plastic bags, BOPP and injection molding generally fell, with poor cost pass-through hampering domestic demand.

I. Price Trends for Key Products (SunSirs Benchmark Price, 24 April)

PP (Spun Yarn)

Benchmark price on 24 April: 7,993.33 RMB/ton

Compared to 1 April: +2.85%

Compared to 1 January: +16.28%

Propylene (Key Raw Material)

24 April benchmark price: 9,327.67 RMB/ton

Compared to 1 April: +3.59%

Compared to 1 January: +21.45%

Propylene has remained at elevated levels, providing core cost support for PP prices. However, price increases for downstream finished products have generally lagged behind those of raw materials, resulting in a continuous compression of profit margins.

II. Key Reasons for the Surge in Polypropylene Exports in March

According to customs data, China exported 405,500 tons of polypropylene in March 2026, representing a month-on-month increase of 66.12% and a year-on-year rise of 25.85%. Cumulative exports for the first quarter reached 939,900 tons, up 28.34% year-on-year, marking China’s official transition to a net exporter of polypropylene. This significant increase in exports stems primarily from three factors:

Geopolitical conflicts in the Middle East leading to a restructuring of global supply

Rising shipping risks in the Strait of Hormuz, coupled with unstable operations at refineries and petrochemical plants in Iran and Saudi Arabia, have caused delivery delays and supply gaps for Middle Eastern sources. Traditional buyers in Southeast Asia and South Asia have urgently shifted to the Chinese market, resulting in a concentrated transfer of orders.

Significant expansion of domestic capacity, with external demand becoming a key driver of exports

In 2025, new domestic polypropylene capacity reached 5.355 million tons, setting an annual record; by April 2026, total capacity stood at 49.045 million tons, accounting for nearly 40% of the global total. With domestic supply pressures continuing to mount, enterprises have proactively expanded into overseas markets.

Overseas demand remains stable, with improved product mix alignment

Exports are primarily directed to Southeast Asia, South Asia, Africa and South America, dominated by general-purpose filament-grade and homopolymer injection-molding grades, whilst the proportion of high-value-added special grades has increased. Robust demand from overseas packaging, injection molding and textile industries underpins sustained export growth.

III. Price Fluctuations and Supply-Demand Dynamics in Upstream and Downstream Sectors

1. Cost Side: Propylene Rises Sharply, Providing Strong Cost Support

As the direct raw material for PP, propylene has continued to strengthen, driven by high crude oil prices and tight supply, accounting for over 75% of production costs. The significant rise in raw material prices has directly pushed up PP production costs, with manufacturers showing a strong willingness to maintain prices, providing crucial support at the price floor. However, the pass-through to downstream sectors has been hindered, making it difficult to fully pass on the cost increases.

2. Supply Side: Ample Domestic Capacity, Exports Absorbing Inventory

Domestic plant operating rates have remained at medium-to-high levels, ensuring ample overall supply. A substantial increase in exports has effectively absorbed domestic output; in March, exports accounted for approximately 13.27% of monthly production, significantly alleviating inventory pressure and shifting the market’s supply-demand balance from surplus to equilibrium.

3. Demand Side: Domestic Demand Continues to Weaken, Downstream Operating Rates Decline Across the Board

In April, operating rates in downstream industries generally declined:

The operating rate for plastic woven bags fell from 48% at the end of March to 45%

BOPP film operating rates fell from 58% to 53%

Injection molding operating rates fell from 49% to 46%

Price increases for downstream products have been far lower than those for raw materials. With strong bargaining power among end-users, a prevalence of long-term contracts and intense competition, enterprises have focused on depleting existing stock, leading to a cooling of procurement sentiment and persistently weak domestic demand.

IV. Market Dynamics and Impact on the Supply Chain

The current polypropylene market presents a unique landscape characterized by “strong external demand but weak domestic demand, high costs, sluggish domestic consumption, and export support”. Exports have become a key factor in stabilizing the market, effectively offsetting the pressure from declining domestic demand; however, cost pass-through to downstream sectors is inefficient, with industry profits concentrated in upstream raw materials, putting pressure on the profitability of downstream processing enterprises. Regionally, the East China and South China markets are dominant, with export supplies concentrated and domestic market transactions remaining subdued.

Overall, the polypropylene market is jointly driven by export support and weak domestic demand. It is expected to continue its volatile pattern in the short term, with the outlook becoming clearer as the pace of downstream resumption of operations and the sustainability of exports gradually become apparent.

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