SunSirs: China PP Market Rebounded after Oversold in January, 2024

According to the commodity market analysis system of SunSirs, the PP market experienced a first decline and then an increase in January, with prices of various wire drawing brands experiencing a repair correction after exceeding their limit. As of January 31st, the mainstream quoted price for T30S (wire drawing) by domestic producers and traders is around 7,671.43 RMB/ton, with a fluctuation of +0.28% compared to the average price level at the beginning of the month.

Industry chain: In terms of PP raw materials, the news of OPEC's reduction in international crude oil production at the beginning of the year came to fruition, gradually affecting the crude oil market to emerge from a weak consolidation. In addition, the continuous tension in shipping has supported the sustained rise in crude oil prices. Driven by it, the price of propylene continues to rise. In terms of PDH, propane supply has contracted in the second half of the month, but demand remains weak and prices have loosened. The methanol market is relatively stable. Upstream raw materials fluctuate, and overall support for PP is still acceptable.

Overall, the overall trend of raw materials in all directions is improving, which is a gradually strengthening sound of PP cost support within the month. In terms of industry load, there was a return to production and maintenance of some production lines during the month, and overall, the average load of the polypropylene industry in January was over 74%. The supply of goods remains abundant, and the inventory situation fluctuates, with limited changes in on-site supply pressure compared to the end of last year. In terms of demand, as the end of the lunar calendar approaches, the holiday situation of terminal enterprises increases, and downstream PP enterprises such as plastic weaving, film materials, and injection molding have a low comprehensive operating rate. However, at the end of the month, some companies engaged in pre holiday restocking operations, leading to an increase in trading activity on the exchange. The overall market for wire drawing materials was driven by costs and demand, resulting in an increase.

In terms of fiber materials, according to the commodity market analysis system of SunSirs, as of January 31st, the spot price of domestic fiber PP has also increased. The mainstream quoted price for domestic producers and traders of Z30S (fiber) is around 7,550 RMB/ton, with an increase or decrease of -1.63% compared to the average price at the beginning of the month, and a decrease of 5.82% compared to the same period last year. The load of downstream non-woven fabric enterprises, the main force of PP fiber materials, slightly decreased within the month, with an operating rate of around 38%, a decrease of about 1% compared to the end of last year. The digestion speed of end products is sideways, and the market demand for fiber materials is mainly based on remote contracts, which generally supports the price of non-woven fabrics. In the second half of the month, the support for the upward trend of spot prices mainly comes from the upstream, and fibers may continue to be weakly consolidated.

In terms of melt blown materials, the melt blown PP market saw a narrow recovery after a decline in January. As of January 31st, the average quotation of domestic melt blown material sample enterprises monitored by the Commodity Market Analysis System of SunSirs is about 8,000 RMB/ton. Compared with the average price level at the beginning of the month, the increase and decrease is -0.93%, and there is a 20% decrease compared to the same period last year. At present, the demand for facial protection in China is generally high, and the impact of winter climate on the consumption of medical melt blown fabric materials is not significant. There is also no significant boost in domestic and foreign demand. In addition, there are not many new orders from downstream factories, resulting in a decrease in overall operating rates. It is expected that the melt blown material market will continue to be weak and stable.

PP analyst from SunSirs believes that the polypropylene market experienced a recovery increase after a decline in January. The trend of upstream raw materials has been fluctuating and consolidating, and the support of the cost side for the market is gradually becoming apparent. The production of terminal enterprises is relatively low, and the demand for pre holiday stocking is increasing at the end of the month. The PP device is mainly loaded horizontally, with limited supply pressure fluctuations. However, the pre holiday market is becoming increasingly strong, and it is expected that the PP market may experience limited growth in the short term.

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