SunSirs: Inventory Depletion & Strong Costs, China PP Market Fluctuation and Rise

According to the Commodity Market Analysis System of SunSirs, the PP market was relatively strong in July, with various wire drawing brands fluctuating and rising. As of July 31st, the mainstream quoted price of T30S (wire drawing) by domestic producers and traders is around 7,400 RMB/ton, with a +3.29% increase or decrease compared to the average price level at the beginning of the month.

Industry chain: On the upstream side, some domestic units in the propylene sector underwent maintenance at the beginning of this month. Supply in the Shandong region was tightened, and the quotation was actively pushed up. In the latter half of the year, the positive impact of the international crude oil rise was evident, boosting market sentiment such as propylene. Downstream investors actively entered the market, and the trading atmosphere on the market improved. At the end of the month, upstream propane prices in PDH were also relatively strong, while coal prices remained stable. The overall strength of polypropylene upstream is relatively strong, which provides reasonable support for the cost side.

The raw materials in all directions have steadily increased, and the cost support for PP is still acceptable. In terms of industry load, the overall industry load remained at around 74% this month, with a relatively flat position compared to the previous period. The overall supply of goods was stable, and the on-site supply of goods was sufficient. In terms of demand, it tends to be average, with the main downstream plastic weaving operating at 40% to 50%. In terms of film materials and injection molding, the operating rate of enterprises remains at the previous level, and the overall position is relatively good. The stocking situation of terminal enterprises is average, and procurement mainly maintains production.

In terms of fiber materials, according to the Commodity Market Analysis System of SunSirs, as of July 31st, the spot price of domestic fiber PP has increased. The mainstream quoted price of domestic producers and traders for Z30S (fiber) is around 7,387 RMB/ton, with an increase or decrease of +3.50% compared to the average price at the beginning of the month, and a decrease of -10.21% compared to the same period last year. This month, the downstream non-woven fabric enterprises, the main force of PP fiber materials, maintained a low horizontal load, and the overall operating rate level was adjusted narrowly at around 30%. The demand for fiber materials in the market is weak, and the digestion speed of non-woven end products is average. Enterprises have average efforts in replenishing fiber PP. The price increase is due to the gradual depletion of polypropylene inventory and the strengthening of costs, and it is expected that fiber materials may continue to operate in a strong manner in the short term.

In terms of melt blown materials, this month's melt blown PP market fluctuated and rose. As of July 31st, the average quotation of domestic melt blown material sample enterprises monitored by the Commodity Market Analysis System of SunSirs is about 8,050 RMB/ton. Compared with the average price level at the beginning of the month, the increase and decrease is +2.22%, and there is a year-on-year decrease of 14.36%. At present, there is little domestic news on health events, and local social news is powerless to drive the consumption of medical meltblown fabric materials. There is also no significant boost in overseas demand. Affected by the cost side and destocking, melt blown material enterprises have increased their factory prices. It is expected that the melt blown material market may maintain a volatile consolidation trend.

PP analysts from SunSirs believe that the polypropylene market has risen in July. The market for raw materials such as propylene and crude oil has risen, and the support for the market from the cost side has increased. The operating rate of terminal enterprises is average, and the demand for goods tends to maintain production, while the demand release is flat. Market orders are at a low season level. However, overall inventory is gradually decreasing, and it is expected that the PP market may continue to lean towards consolidation and operation.

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