Strong Costs Keep PP Prices Stable Ahead of the Holiday

February 13 news

According to the commodity market analysis system, before the Spring Festival, the PP market in China remained firm, with relatively narrow price fluctuations for various grades of products. As of February 13, the benchmark price for PP fiber was reported at 6700 CNY/ton, with a year-on-year change rate of +3.32%.

Price Trend

Regarding raw materials:

At the beginning of the year, U.S. actions pushed up international crude oil prices. Currently, the uncertainty in the U.S.-Iran situation has sparked concerns among industry players, causing high market volatility, which provides strong support to the upstream end of PP. In terms of propylene, prices also remain high, mainly due to tight supply and demand balance, in addition to the previous rise in raw material costs. Meanwhile, the price of propane at ports remains high, with the overall spot price center unchanged. In summary, the positive performance of various raw materials for PP provides strong cost support.

Supply side:

Two months into the first half, Chinese PP companies' restarts and maintenance were largely balanced, with overall operating rates showing limited changes. As of the time of writing, the overall industry load level in China has slightly decreased by 1% to around 74%, a negligible difference from the beginning of the month. The current weekly average total production is above 760,000 tons, with inventory levels around 660,000 tons continuing to be digested, maintaining ample supply in the market. Overall, the supply side provides moderate support for spot prices.

Demand side:

Affected by pre-holiday stockpiling, the overall trading atmosphere in the downstream market of the industry improved in early February. At the same time, there were some follow-up orders and increased inventory building operations, with refineries overselling. The phased commissioning vacuum in the later market has stabilized the mindset of operators, and demand-side support for PP has strengthened. However, with the approach of the Lunar New Year, most end-user enterprises are gradually arranging holidays, and production schedules will decline. The year-end capital recovery to some extent restricts demand. Currently, the market trading is calm, and operators are gradually withdrawing.

Future Market Forecast

Two months into the early part of February, the PP market prices in China remained firm. From a fundamental perspective, the overall raw materials upstream maintained strong support for the PP cost end. The industry's operating rate saw minor adjustments, with a slight improvement in consumption. During the Spring Festival, trading activities may become quiet, and given the large production capacity base, there is a possibility of inventory accumulation. Therefore, it is expected that after the holiday, the PP market might face some upward resistance.