September 1st, according to the news,
According to Spotcom data, the PP market in China rebounded after a decline in August, with prices for all grades of products increasing. As of August 31, the benchmark price for PP fiber was 9246.67 CNY/ton, representing a 3.05% increase from the beginning of the month.
Price Trend
Regarding raw materials:
In the international crude oil market, the performance this month was an extension of the decline at the beginning of the month, followed by a gradual recovery and increase. During this period, at the beginning of the month, both the United States and Iran were actively engaged in negotiations, with sanctions being eased. However, the situation subsequently became deadlocked, and the prospects for reaching an agreement caused concern among industry players. There was no sign of a full opening of the Strait of Hormuz, leading to a return of geopolitical premiums and an increase in the long-term cost of PP. At the same time, the profits of some downstream sectors of propylene improved during the month, and several downstream facilities were restarted. Propylene, driven by these dual positive factors, saw a slight correction at the end of the month, but the strong performance earlier in the month has kept it at a high level. Combined with the strengthening of thermal coal at the end of the month, overall, the raw material end provided strong support for PP in August.
Supply aspect:
In August, China's PP enterprises saw both maintenance and restarts, with the overall operating rate remaining largely stable. At the beginning of the month, Shell's second line and Yulong Petrochemical's facilities entered maintenance, while Zhejiang Petrochemical and Juzhengyuan restarted in the second half of the month. Throughout the month, the overall industry load in China fluctuated around 69%, with weekly average production near 720,000 tons. The current inventory level is close to 530,000 tons, and there is still an expectation of increased supply in the future. However, overall, the recovery of supply has been slower than expected, and the support from the supply side for spot prices is moderate.
Demand side:
Current polypropylene consumption is gradually entering the traditional peak season, but demand at the beginning of the month has not yet moved out of the off-season level. The downstream market in the industry is not fully accepting high-priced goods, and the overall trading atmosphere is cautious. Coupled with the counter-seasonal trend in the cost end, terminal enterprises are not very active in building inventory, mostly taking goods as needed in small, sporadic orders. For small and medium-sized enterprises, there is limited improvement in operating rates, with downstream loads stabilizing at around 45%. Buyers are heavily in a wait-and-see mode, with trading in the market being slow, and overall demand providing only moderate support to PP.
Future Market Forecast
In August, the PP market prices in China first fell and then rose. From a fundamental perspective, the cost side was relatively strong, but this also put counter-seasonal cost pressure on PP. Demand-side orders were limited, with no significant increase in volume. PP analysts believe that although the PP market is currently supported by cost values, supply is strong while demand is weak. The entanglement of bullish and bearish factors may lead to insufficient upward momentum in the future, and the market trend may continue to consolidate.
Technical Analysis
Analysts believe that according to SpotCom, on August 17th, the 10-day moving average of PP crossed above the 20-day moving average, with the positive difference expanding slightly before a small retracement. On the other hand, auxiliary indicators show that the 5 price levels of PP are almost all at high positions. It is judged that there is a higher possibility of spot prices consolidating at high levels in the short term. For future market trends, it is recommended to closely monitor international crude oil and Middle East maritime shipping conditions.
