Fundamental Support at the End of August, PP Consolidates and Stabilizes

August 27 update

According to the commodity market analysis system, at the end of August, the PP market in China was experiencing fluctuating consolidation, with most grade product prices showing narrow changes. As of August 27, the mainstream offer price for drawing PP by Chinese producers and traders was around 7,215 CNY/ton, a change rate of -1.03% compared to the beginning of August.

Price Trend

Regarding raw materials:

Mid-month, geopolitical tensions in Eastern Europe eased, easing market concerns about unstable crude oil supplies. At the same time, expectations of increased production from OPEC+ became clearer, prolonging the bearish factors weighing on international oil prices. By month-end, propane prices followed crude oil lower, while cost support for PDH-based producers continued to weaken. Meanwhile, propylene prices remained relatively stable, though recent increases in plant operating rates—coupled with only moderate downstream demand—raise concerns that could weigh on future market trends. Overall, the cost-support dynamics for PP feedstock materials are trending toward a more relaxed stance.

Supply side:

At the end of August, the operating rates of China's PP enterprises saw a slight increase. Overall, the industry load level remained at 78%, with the weekly total production approaching 790,000 tons. In the latter part of the month, the resumption of operations for Zhejiang Petrochemical's Line 1 and Jibo Polyolefin's Lines 1 and 2, coupled with the approaching commissioning of Ningbo Daxie's new 900,000-ton production line, clearly indicated a trend towards a more relaxed market supply, severely limiting the support from the supply side. Currently, the domestic supply remains ample, with inventory levels approaching 800,000 tons or more, and the digestion process is slow. In summary, the support from the PP supply side for the spot price has not improved and continues to face significant pressure.

Demand aspect:

At the end of August, polypropylene is in the transition period between the off-season and peak season. Market participants in China are looking forward to and preparing for an increase in PP demand. However, the current trading atmosphere in the market remains sluggish. Traders have not seen large-scale advance stockpiling, and new orders in the market are still mainly small and scattered, with a focus on contract deliveries. Operations tend to be on a just-in-time basis, and the improvement in cargo liquidity is limited. The operating rates of downstream enterprises have slightly increased, and there is a potential willingness to build inventory in sectors such as plastic weaving, construction, and agriculture. At the same time, macro guidance such as supply-side reform has provided solid support for the market bottom. It is recommended to closely monitor the dynamics of downstream operations.

Future Market Forecast

At the end of August, the PP market prices in China fluctuated and consolidated. From a fundamental perspective, the upstream raw material market was relatively weak, collectively reducing support for PP. The industry load remained largely stable with a slight increase, and there is an expectation of ample supply in the future. Consumption is currently at the transition between the off-season and peak season. The market has begun to show signs of speculative buying, and it is expected that PP prices may rise during the peak season.