June 10th News
According to Spotcom data, in early June, the PP market in China was stable with a slight increase. The prices of various grades of products remained firm. As of June 10, the benchmark price for PP fiber was 9,656.67 CNY/ton, representing a 0.87% increase from the beginning of the month.
Price Trend
Regarding raw materials:
In early June, high-level talks between the United States and Iran in the Middle East reached a stalemate, leading to divergent market sentiments. During this period, the geopolitical premium fluctuated while demand was under pressure, causing the market to first rise and then fall, providing limited support to the long-term cost of PP. In terms of propylene, market demand remained stable, but with the restart of production facilities from the previous month, supply increased, suppressing the spot price and extending the recent trend of retracement. Overall, the raw material prices for PP showed mixed movements, offering only moderate support to the cost of PP.
Supply side:
In early June, some maintenance plans for PP enterprises in China were still being implemented, leading to a further decline in the overall operating rate. Although Maoming Petrochemical's Line 3 was restarted at the beginning of the month, Yulong Petrochemical's Line 1, Fushun Petrochemical's old line, and the integrated project of Guangxi Petrochemical were all shut down. As of the time of writing, the overall industry load in China is around 65%, with weekly production below 680,000 tons. The current inventory level is around 600,000 tons, and the overall supply remains relatively tight. Overall, the supply side provides moderate support for the spot price.
Demand side:
Current polypropylene consumption is gradually entering the off-season level, with the downstream market in the industry continuing to show resistance to high prices, and the overall trading atmosphere remains cautious. Buyers are purchasing according to their needs, with modest inventory building operations, mostly seen as scattered small orders for immediate use. At the same time, affected by high cost pressures, the operating rates of small and micro enterprises in China have shown limited improvement, while large and medium-sized enterprises continue to maintain stable purchasing. Overall, the demand side is taking a wait-and-see attitude, providing only moderate support to PP.
Future Market Forecast
In early June, the PP market prices in China showed a slight increase. From a fundamental perspective, the industry's operating rate remained low in June, and there was limited change in the arrival of imported materials at the ports, with tight spot resources persisting in the market. The cost side fluctuated, while demand entered the off-season, making it difficult to see a significant increase in the short term. PP analysts believe that the current PP market is characterized by weak supply and demand, with upward momentum hindered, and this round of price increase may not be significant.
Technical Analysis
Analysts believe that according to SpotCom, on June 3rd, the 10-day moving average of PP crossed below the 20-day moving average, but the average difference within the decade remained relatively stable. On the other hand, the auxiliary indicators show that the 5 price levels of PP are currently at a recent median and at a distant high. It is judged that there is some resistance to the upward movement of the spot price in the short term, and it is recommended to closely monitor the international crude oil and Middle East shipping conditions for future market trends.
