PP Market Trends in China

1. On the previous trading day, the domestic PP market price weakened and declined, with some transactions seeing price reductions of 50-150 RMB/ton, and trading activity was sluggish. During the trading day, futures prices fell sharply, coupled with a simultaneous decline in oil prices, significantly impacting market sentiment. However, there was no significant increase in supply, with spot supply remaining tight in some local markets, and some petrochemical plants still raising prices, limiting further declines in the market.
2. Key Factors Affecting Current Market Price Changes

Demand: Downstream end-user operating rates have declined significantly recently. Specifically, the operating rates of woven plastic and injection molding plants have both decreased by 3% to 40% and 42% respectively, BOPP operating rates have decreased by 6% to 36%, and modified PP operating rates have decreased slightly by 7% to 6961%. The current significant decline in operating rates reflects downstream end-user resistance to high raw material prices and weak acceptance of new orders. The lack of trading volume continues to exert strong downward pressure on prices.

1. Market Sentiment: The futures market is influenced by expectations of a decline in crude oil prices, and there is a possibility of a basis correction. A short-term downward trend may emerge, leading to a slightly pessimistic market sentiment among traders and suppressing their willingness to enter the market.
2. Supply: PP operating rates remained largely unchanged before the holiday, currently at 63.95%. While market supply is not significantly different, regional supply imbalances exist. In some areas, the spot market for medium-to-high copolymer and fiber grade PP is extremely tight, providing support for spot prices and limiting the extent of any pullback.
3. Trend Assessment: The PP market is expected to trade with a narrow, slightly weak bias today. The pullback in PP futures has increased its downward pressure on spot prices. On the spot market, declining cost support will significantly impact traders’ market sentiment. On the demand side, while there is current demand, downstream buyers are hesitant due to high prices, resulting in limited actual trading volume. Coupled with weak buying interest, prices have some downward pressure. However, limited increases in supply and tight circulation of upstream spot resources continue to support prices and mitigate the decline in spot prices.

Today, the inventory level of major producers is 840,000 tons, a decrease of 10,000 tons from the previous working day, a drop of 1.18%. The inventory level was 820,000 tons at the same time last year.