According to data from SunSirs, the domestic polypropylene (PP) market remained stable early in June before declining, with prices across various grades seeing significant downward adjustments. As of June 30, the benchmark price for PP (drawing grade) was quoted at 7,566.67 RMB/ton, a drop of 20.96% from the beginning of the month.
Regarding raw materials: Positive signals emerged in June regarding high-level talks between the US and Iran. Although full restoration of shipping through the Strait of Hormuz would take time, the market perceived a de-escalation of tensions in the Middle East, leading to a rapid unwinding of the geopolitical risk premium. International crude oil prices broke downward, causing a collapse in the long-term cost basis for PP. Propylene prices fell in tandem, dragged down by the crude oil market; additionally, the restart of production units from the previous month increased market supply and suppressed spot prices, resulting in a sharp market decline during the second half of the month. Overall, the significant drop in PP raw material prices exerted negative pressure on the cost side.
Regarding supply: Domestic PP producers continued with planned maintenance in June, keeping the overall operating rate low and causing it to dip further. While Maoming Petrochemical’s Line 3 restarted early in the month, Yulong Petrochemical’s Line 1, Fushun Petrochemical’s older line, and the Guangxi Petrochemical integrated project all experienced shutdowns. As of this report, the industry's overall operating load stood at approximately 65%, with weekly production falling short of 680,000 tons. Current inventory levels are around 580,000 tons; while supply appears generally ample, there are plans for more production units to resume operations in the future. Overall, the supply side provided limited support for spot prices.
Regarding demand: Polypropylene consumption is currently in a seasonal lull. Downstream markets remain resistant to high prices, and with the market in a downward trend, buyers are adhering to the "buy-up, not buy-down" mentality, resulting in a cautious trading atmosphere. End-user enterprises are purchasing strictly on an as-needed basis with little inventory accumulation, favoring small, sporadic orders for immediate use. Operating rates among small and micro-enterprises have seen limited improvement, while large and medium-sized enterprises continue to purchase steadily. Overall, the demand side remains in a wait-and-see mode, offering poor support for PP prices.
In summary, the domestic PP market saw prices consolidate during the first half of June before breaking downward in the second half. From a fundamental perspective, costs have plummeted; while industry operating rates remain low and there are limited fluctuations in the arrival of imported materials at ports, demand has entered a seasonal lull with little prospect of a near-term surge in volume. Amid this supply-demand imbalance, spot market supplies appear ample. Analysts at SunSirs observe that the PP market is characterized by weak supply and demand alongside a collapse in costs; consequently, there is insufficient upward momentum, and the market is likely to remain on a downward trajectory.
SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.
