According to the Commodity Market Analysis System of Shengyi Society, the domestic PP market was consolidating and operating in mid May, with most brand products experiencing narrow price adjustments. As of May 21st, the mainstream offer price for wire drawing by domestic producers and traders is around 7440 yuan/ton, a decrease of -0.56% compared to the price level at the beginning of May.
price trend
In terms of raw materials:
In mid May, the US China talks released many positive signals such as the suspension of tariffs, and crude oil prices continued to rebound. At the same time, the decoupling of domestic propane trade is expected to gradually be lifted, and the cost pressure on PDH manufacturing enterprises may decrease in the future, but the differentiation of demand will hinder the growth rate. There are expectations of loose supply in the propylene sector, leading to price fluctuations and adjustments. At the same time, geopolitical conflicts in Europe have eased, the OPEC+production increase agreement continues, and the current situation of weak economy and demand still exists. Overall, in mid May, the prices of various PP raw materials fluctuated, providing moderate support for PP costs.
Supply side:
In mid May, the load of domestic PP enterprises remained stable with small fluctuations, and the market supply remained generally abundant. Overall, the industry’s overall load level is almost the same as 77% in the first half of the year, with an average weekly total output of about 750000 tons. Although companies such as Juzhengyuan and Jinneng Chemical have maintenance plans, the restart of Lanzhou Petrochemical has basically smoothed out the production capacity lost during interval maintenance. In addition, with the production of 1.4 million tons of new capacity in the next quarter, there is a clear expectation of loose supply in the future. Although the total domestic inventory has decreased to 860000 tons, it is still at a high level. Overall, there is still some suppression on the spot price of PP by the supply side.
In terms of demand:
In mid May, the demand side of PP continued to be weak, and on-site trading gradually entered the traditional off-season, while stocking maintained a weak and rigid demand situation. In terms of plastic weaving, the consumption level of terminal enterprises has returned to the off-season level first. With the passing of the small peak in material usage, the release speed of PP demand in fields such as construction and agriculture has slowed down. Under the influence of the temporary suspension of tariffs between China and the United States in the early stage, market confidence has been strengthened, and there is a high expectation of a rebound in PP export consumption in the future. The export resistance of downstream PP products in China has decreased. However, the industry still needs to go through a process of simplification to offset some of the positive factors. The current buyers’ purchasing operations are still cautious and biased towards scattered small orders, although there has not been a significant increase in new orders in the market. Overall, the performance of the PP demand side in mid May was average.
Future forecast
In mid May, the domestic PP market prices were consolidating. Fundamentally speaking, the overall performance of upstream raw materials in supporting PP is average. The industry has abundant supply, with slight inventory digestion, and consumption entering the off-season level. The current outcome of the China US talks still has a positive impact on the upstream and downstream of PP, but the market is dominated by supply and demand, and the increase is not as expected. It is expected that the PP market will enter a consolidation weak market in the short term.
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