SunSirs: Long and Short Positions, China PP Fluctuated at the End of October

According to the Commodity Market Analysis System of SunSirs, the domestic PP market at the end of October tended to consolidate, with prices of various brand products fluctuating. As of October 29th, the benchmark price for PP wire drawing offered by SunSirs was 6,773.33 RMB/ton, a decrease of -2.12% compared to the price level at the beginning of October.

In terms of raw materials: In the second half of October, the geopolitical situation in the Middle East escalated, and market concerns about supply resurfaced. In addition, the decline in US crude oil inventories has led to a rapid recovery in the international oil price market. The propylene sector experienced a rapid decline in the early stage due to the decline in crude oil prices and insufficient trading. Recently, there has been a sustained low-level sideways trend, with industry players mainly adopting a wait-and-see approach. The current supply and demand of propane are balanced, and the market is stable. However, due to the rising cost of the oil production method, there is an expectation of an improvement in the profit situation of PDH manufacturing enterprises. Overall, the prices of PP raw materials have slightly improved in terms of cost support.

Supply side: In the second half of October, the operating rate of domestic PP enterprises rose and then fell back, with an overall narrow change. As of the time of writing, the overall load level of the domestic industry is 77%, which is comparable to the operating rate in the first half of October. The weekly average total output is close to 780,000 tons. During the trial production of 400,000 tons/year equipment at Guangxi Petrochemical in the middle of the month, the industry experienced relatively concentrated shutdowns and troubleshooting at the end of the month, which slightly eased the pressure on the supply side. The current on-site supply remains abundant, with inventory levels accumulating at a high level of over 920,000 tons. Combined with the approaching restart of Zhejiang Petrochemical's fourth line, overall, the PP supply side still lacks support for spot prices.

In terms of demand: October falls within the traditional peak season for polypropylene. Although the materials used in fields such as plastic weaving and agriculture have improved to some extent at the end of last month, this year's peak season is still being counterfeited by PP prices. The positive news of improved market trading atmosphere has been smoothed out by many negative factors, coupled with the previous announcement of the Federal Reserve's interest rate cut and the subsequent drag of US trade barriers on end products going global, which has constrained the load on downstream enterprises. Lack of demand and accumulation of inventory. On the other hand, the Fourth Plenary Session of the Communist Party of China set goals for the economic direction, resulting in a slight improvement in the supply-demand margin. In the future, Double Eleven will boost e-commerce consumption, and there may be an increase in new orders in the film material field. However, overall, the demand side has poor momentum, making it difficult to support PP spot prices.

At the end of October, the domestic PP market prices returned to consolidation. From a fundamental perspective, the prices of various upstream raw materials have risen more or fallen less, providing narrow support for PP. The industry load remains stable at a high level, and the expectation of loose supply remains unchanged. The improvement in consumption is limited, and the market lacks positive guidance. It is expected that the PP market will continue to adjust.

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