Demand Release Fails to Meet Expectations, PP "Golden September" Goes Against the Market Trend

October 06, News

According to the commodity market analysis system, in September, the PP market in China maintained a weak operation, with prices of various grades falling more often than rising. As of September 30, the mainstream offer price for fiber from Chinese producers and traders was around 6923.33 CNY/ton, a change rate of -3.57% compared to the beginning of September.

Price Trend

In terms of raw materials:

Since September, the geopolitical situation in Eastern Europe has remained relatively calm. Meanwhile, OPEC+’s earlier production increase plan, combined with a new round of output hikes announced in September, has eased market concerns about crude oil supply, leading to volatile international oil prices. On the other hand, propylene prices initially surged earlier in the month, boosted by the maintenance shutdown at Haiwei, but with ample supply available on the market, the positive momentum eventually waned as bullish factors played out, pushing prices from their highs into a downward trend. Meanwhile, propane prices have gradually strengthened amid rising seasonal demand. Overall, the price trends for PP’s various raw materials have been mixed, offering only moderate cost support.

Supply Side:

In September, the operating rates of PP enterprises in China fluctuated. In the first half of the month, Yulong Petrochemical's Line 1 and Shaoxing Sanyuan underwent plant maintenance, while in the latter half, Daqing Lianhua's Line 1 and Huizhou Lituo's Line 1 resumed operations. As of the time of writing, the overall industry load level in China is 77%, which is comparable to the operating rate at the beginning of September. The weekly total production exceeds 770,000 tons. The trend towards a more relaxed supply situation is clear, severely limiting the support from the supply side. Currently, the supply within the market remains ample, with inventory levels above 770,000 tons being relatively manageable. Overall, the PP supply side provides inadequate support for spot prices.

On the demand side:

September is in the traditional peak season for polypropylene, with some improvement in material usage in fields such as plastic weaving and agriculture. There is also an increase in new orders in the packaging film sector, and the market momentum continues to rise. However, the positive impact of the improved trading atmosphere in the market has been offset by numerous negative factors. The announcement of the Federal Reserve's interest rate cut has led to a weakening of market expectations. Additionally, downstream enterprises are operating at low capacity and have holiday arrangements during National Day, leading to slow overall consumption. As a result, the peak season consumption of PP has not started as expected, and there is insufficient support on the demand side.

Market Forecast

In September, China's PP market prices continued to fall weakly. From a fundamental perspective, the prices of upstream raw materials showed mixed trends, providing only moderate support to PP. The industry's operating rate was slightly adjusted at a high level, with an expectation of ample supply in the future. Although there were some improvements in consumption, the market performance was dragged down by cost and supply factors. Currently, the market does not show significant peak season characteristics, and the resistance to PP price increases is considerable, suggesting that the market may continue to experience a weak adjustment trend.