Strong Supply and Weak Demand Continues, PP Fluctuates and Falls in November

December 1st News

According to the commodity market analysis system, in November, the PP market in China experienced a fluctuating downward trend, with more price declines than increases for various product grades. As of November 30, the benchmark price for PP fiber was 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:

Since November, with the impact of OPEC+’s new round of production increases and the easing of regional tensions, industry participants have grown increasingly concerned about a prolonged oversupply of crude oil. Meanwhile, weakening demand in the U.S. and lingering tariff issues are weighing on global economic growth and demand expectations, causing international oil prices to remain weak and volatile. As for propylene, following the downward trend of crude oil prices earlier on, inventories declined in the second half of the month, leading to tighter supply conditions. This eased sales pressure on enterprises, prompting them to start controlling output and gradually increasing shipments. As a result, spot prices halted their decline and began to rise. In terms of propane, stronger external market conditions at the beginning of the month provided a boost, driving up port-based prices and pushing overall prices higher. Overall, the price trends of PP’s various raw materials have been mixed, providing only moderate support for PP costs.

Supply side:

As we enter November, Chinese PP enterprises have seen a mix of resumption of operations and maintenance shutdowns, resulting in only limited changes to the overall operating rate. As of press time, the industry’s overall load level stands at around 77.5%, barely differing from the level at the beginning of the month. At the start of the month, production lines such as those at Ningxia Petrochemical, Guangdong Petrochemical, and Beihai Refining & Chemical underwent short-term maintenance, while the No. 1 line at Dushanzi Petrochemical was temporarily shut down. In the middle of the month, three lines at Zhenhai Refining & Chemical, the No. 2 line at Jingbo Petrochemical, and the No. 2 line at Luoyang Petrochemical resumed operations. Recently, however, equipment failures at facilities such as Shanghai Sinopec led to maintenance shutdowns; the resumption of these units largely offset the lost capacity. Currently, the average weekly total output is close to 810,000 tons, with inventories hovering around 8.7 million tons, ensuring that supply within the market remains ample. Overall, the supply side’s support for spot prices has leveled off.

Demand side:

The outcome of the China-U.S. talks in early November fell short of market expectations, providing only limited boost to industry sentiment. Although the Double 11 e-commerce festival in November provided some impetus for consumption in sectors such as packaging and home appliances, the overall trading atmosphere in the market improved only marginally. Meanwhile, the impact of the Federal Reserve’s interest-rate cuts and trade protectionism remains evident, weighing down on the export of finished products and leaving downstream enterprises in an unfavorable position. Currently, the market for finished PP products from end-user companies is lukewarm, with slow digestion of raw materials, thus dampening manufacturers’ willingness to build up inventories. The large supply base in the industry is mismatched with weak, rigid demand from end-user factories, making it difficult for demand momentum to provide support for PP spot prices.

Future Market Forecast

In 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 to PP. The industry load remained high and stable, with limited improvement in consumption. With a large production capacity base, the supply situation remains loose, and there is a lack of momentum for further inventory digestion. It is expected that the PP market will continue to experience an adjustment period.