September 14 news
According to SpotCom data, in the first half of September, the PP market in China remained positive, with prices for various grades of products increasing. As of September 14, the benchmark price for PP fiber was reported at 10,100 CNY/ton, a 5.83% increase from the beginning of the month.
Price Trend
Regarding raw materials:
In the first half of September, the situation in the Middle East was turbulent, and ceasefire agreements were difficult to implement. The risk of shipping in the Strait of Hormuz increased, leading to market concerns about international crude oil supply, and geopolitical premiums continued to rise, pushing up the far-end cost value of PP. Propylene, within this period, also saw an increase due to the rise in crude oil prices. Coupled with a slight improvement in some downstream demand, although propylene supply increased, it was driven by dual positive factors to reach high levels. Additionally, with the rise in thermal coal prices, overall, the support from the raw material side for PP was strong in the first half of September.
Supply side:
Entering September, maintenance and restarts at Chinese PP enterprises have been mixed, with the overall operating rate approaching 70%, showing minor fluctuations compared to the end of last month. Recently, companies such as Guangxi Petrochemical and Dongguan JuZhengYuan have plans to increase their production loads, leading to a small expectation of increased supply in the future. The current weekly average production remains around 720,000 tons, with inventory levels near 540,000 tons, which is relatively low. Overall, the slow recovery in supply and low inventory levels provide some support to spot prices, and the supply side offers moderate support to spot prices.
Demand side:
Currently, polypropylene consumption is in the traditional peak season. Since the beginning of the month, demand has gradually moved out of the off-season levels, with the downstream market slowly following. However, due to the counter-seasonal trend in the cost end, coupled with the fact that the PP spot price has already risen to a high level, buyers are not fully accepting the high prices, and the overall trading atmosphere is cautious. End-users' strategies tend to be on a just-in-time basis, with orders mostly small and scattered, and there is low enthusiasm for building inventory. For small and medium-sized enterprises, the operating rate has slightly improved, with the downstream load slightly above 45%, and overall, demand provides only moderate support for PP.
Future Market Prediction
In the first half of September, China's PP market prices increased significantly. From a fundamental perspective, the cost side was strong, but it also put counter-seasonal cost pressure on PP. Demand-side orders saw a moderate increase, with downstream operations being cautious. PP analysts believe that the current PP market is mainly supported by cost values, while also benefiting from the traditional peak season and tight supply balance. It is recommended to pay attention to the return of facilities and the situation in the Middle East, particularly between the US and Iran.
