Fundamentals Lack Support, PP Prices Fall in Early September in China

September 9th, news

According to the commodity market analysis system, in early September, the PP market in China softened, with prices for most grades of products slightly declining. As of September 9, the mainstream offer price for drawing grade from Chinese producers and traders was around 7113.33 CNY/ton, a change rate of -0.93% compared to the price level at the beginning of September.

Price Trend

Regarding raw materials:

In early September, geopolitical tensions in Eastern Europe and the Middle East remained relatively calm, leading to stable expectations for crude oil supply in the market. Meanwhile, OPEC+ continued its production increase, causing international oil prices to fluctuate downward. On the propylene front, supply tightened earlier in the month due to the maintenance shutdown at Haiwei, but ample domestic sources kept prices from rising significantly. Downstream demand, however, remained lackluster, leaving price trends largely stagnant. Meanwhile, propane prices found some support as higher global benchmark prices encouraged buyers, resulting in a stronger bottoming-out trend in the short term—though costs for PDH-based producers stayed steady. Overall, raw material markets for PP showed only moderate cost support across the board.

Supply aspect:

In early September, the operating rates of China's PP enterprises remained high and stable. As of the time of writing, the overall load level of the Chinese industry is around 80%, basically unchanged from the end of August, with the weekly total production also remaining flat at 810,000 tons. Recently, the first line of the 900,000-ton new production line at Ningbo Daxie Phase II, with a capacity of 450,000 tons, has been commissioning, clearly indicating a trend of a more relaxed market supply, which severely limits the support from the supply side. Currently, the supply in the market remains ample, with inventory levels significantly rising to over 830,000 tons. In summary, the supply side of PP provides poor support for the spot price.

On the demand side:

In early September, polypropylene is in the transition period between the off-season and peak season. Traders are looking forward to an increase in PP demand. However, the trading atmosphere in the market remains sluggish. Merchants are slowly starting to stock up, and new orders in the market are still mainly small and scattered orders and contract deliveries. The improvement in cargo liquidity is limited. Downstream enterprises' operating rates remain at a moderate level, and the potential for inventory building in sectors such as plastic weaving, construction, and agriculture is unclear. The peak season consumption of PP has not yet started, providing only moderate support to the demand side.

Future Market Forecast

In early September, the PP market prices in China declined. From a fundamental perspective, the upstream raw material prices were weak, providing poor support for PP overall. The industry's operating rates remained high and stable, with expectations of a short-term supply surplus. Consumption is currently at the transition between the off-season and peak season. The current market's seasonal speculative buying atmosphere is constrained by industry expansion and weak demand. It is expected that PP may still need to consolidate in the short term.