Fundamental positives remain elusive; PP prices likely to fall from their low levels by late November

November 27th, news

According to the commodity market analysis system, by the end of November, the PP market in China experienced a fluctuating downward trend, with more declines than increases in the prices of various product grades. As of November 26, the benchmark price for PP filament was reported at 6,363.33 CNY/ton, a change rate of -5.35% compared to the price level at the beginning of November.

Price Trend

Regarding raw materials:

As the end of the month approaches, international crude oil prices are being influenced by OPEC+’s latest round of production increases and a calming of regional geopolitical tensions, prompting industry players to worry about a prolonged supply surplus in the long term. On the other hand, weakening demand in the U.S., coupled with the lingering impact of U.S. tariffs on global economic growth and demand expectations, has led to a decline in international oil prices. Regarding propylene, earlier inventory has been largely absorbed, tightening supply conditions; as a result, companies face little pressure to sell and are focusing on controlling output while increasing shipments. Influenced by these factors, the spot price of propylene continues to rise. As for propane, overseas markets remain firm, with port-based cargoes driving price increases. Overall, the prices of various PP raw materials show mixed trends, providing only moderate support for PP costs.

Supply side:

At the end of November, PP enterprises in China saw a mix of restarts and maintenance. As of the time of writing, the overall operating rate of the industry in China is around 77.5%, with little change from mid-month. The current weekly average total production is close to 810,000 tons, with inventory levels at about 870,000 tons. While Zhenhai Refining & Chemical's Line 3, Jibo Petrochemical's Line 2, and Luoyang Petrochemical's Line 2 have restarted, Shanghai Secco's partial unit underwent maintenance due to malfunctions, and Dushanzi's old Line 2 had a short shutdown. The lost capacity was largely offset, and the supply within the market remains ample. Overall, the supply side's support for the spot price has remained stable.

Demand side:

The early Double 11 e-commerce festival had a limited impact on improving market trading sentiment for items such as packaging and home appliances. Currently, the demand for finished products from PP end-user enterprises in China is lukewarm, with slow raw material consumption, leading to low willingness to build up raw material inventories. Additionally, the results of the Sino-US talks at the beginning of the month did not meet market expectations, providing little boost to business confidence. At the same time, the effects of the Federal Reserve's interest rate cuts and trade protectionism are still present, hindering the export of terminal products, and downstream enterprises are operating at unsatisfactory capacity levels. By the end of November, the light trading pattern from earlier periods continued, with a large supply base in the industry not matching the weak essential purchasing from terminal factories, making it difficult for market momentum to support the spot price of PP.

Future Market Forecast

At the end of November, the PP market prices in China fluctuated and declined. From a fundamental perspective, the upstream raw material prices showed mixed trends, providing only moderate support for PP. The industry load remained high and stable, with limited improvement in consumption. With a large base of production capacity, the supply remains loose, and there is a lack of momentum for further inventory digestion. It is expected that the PP market trend may continue to adjust.