October 23rd, news
According to SpotCom data, entering late October, the PP market in China has seen a high-level increase, with overall prices for various grades of products rising. As of October 23, the benchmark price for PP fiber was reported at 10,733.33 CNY/ton, an 8.05% increase from the beginning of the month.
Price Trend
Regarding raw materials:
In the international crude oil market, since October, concerns over the passage through the Strait of Hormuz have pushed up oil prices. Recently, airstrikes in the Middle East and conflicts such as oil tankers catching fire in the waters of the Strait of Hormuz have continued to escalate. Multiple factors have disrupted the market, leading to an increase in geopolitical risk premiums. Investors quickly priced in supply risks, actively increasing their long positions in crude oil. The expectation of rising shipping insurance costs further amplified supply concerns, pushing oil prices higher. At the same time, a significant drop in U.S. crude oil inventories provided support, with fundamental and geopolitical news resonating to push oil prices above key resistance levels. As a result, propylene prices have also risen in tandem with crude oil. However, recent lagging demand has led to a pullback from the highs. In China, thermal coal prices have strengthened due to colder weather. Overall, PP (polypropylene) costs remain high.
Supply side:
Entering late October, Chinese PP enterprises' facilities are mostly stable with minor adjustments. The overall operating rate is close to 65%, which is relatively low. As the end of the month approaches, companies such as Ningxia Baofeng Line 3, Sino-Saudi Tianjin, and Lihe Zhixin all have plans to increase their production loads, although the total capacity returning is limited. The current weekly average production is less than 680,000 tons, and the social inventory has decreased to 620,000 tons. Overall, the slow recovery in supply and relatively low inventory levels provide some support to spot prices, with the supply side offering decent support to the spot price.
Demand side:
In October, polypropylene consumption in China is in the traditional peak season, with demand gradually moving out of the off-season levels. At the same time, e-commerce is driving the consumption of appliances and packaging, and the downstream market is gradually following. However, since the spot price of PP has risen to a high level, buyers are not very receptive to high-priced sources, and the overall trading atmosphere is cautious. End-user companies tend to adopt a strategy of purchasing as needed, with most orders being small and scattered, leading to low enthusiasm for building inventory, and generally low inventory levels. For small and medium-sized enterprises, the operating rate has slightly improved, but the downstream load is less than 43%, resulting in overall moderate support for PP from the demand side.
Future Market Prediction
In October, the PP market prices in China surged and then remained firm. From a fundamental perspective, the cost side increased and then stabilized, while the increase in demand-side orders was limited, with downstream operations being cautious. PP analysts believe that the current PP market demand is limited, with high cost values and expectations of a slight increase in supply. The market is currently grappling with multiple conflicting factors, and it is expected that the PP market trend may enter a phase of fluctuation and consolidation.
