Entering September, the domestic PP market first surged and then consolidated, with overall prices of various brand products rising. As of September 30th, the benchmark price for PP wire drawing was quoted at 9933.33 yuan/ton, an increase of 4.09% compared to the beginning of the month.
price trend
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In terms of raw materials:
The situation in the Middle East was turbulent in the first half of September, and the ceasefire agreement was difficult to implement, which pushed up international crude oil prices. In the second half of the month, the Iranian President went to the United States to attend a meeting. US President Trump publicly expressed his willingness to meet with the Iranian President. At the same time, Iran has conveyed clear conditions to the mediator to restart negotiations. Multiple signals mark a substantial diplomatic breakthrough in the ongoing US Iran confrontation. The focus of market trading has shifted from “supply interruption panic” to “situation cooling and supply recovery”. The shipping risks in the Strait of Hormuz have decreased, and market concerns about international crude oil supply have eased. Geopolitical premiums have been reduced, and PP’s remote cost value has fallen at a high level. At the same time, there was a significant high-level decline in propylene, and overall, the raw material support for PP in September was initially strong before rebounding.
Supply side:
Entering September, domestic PP enterprises are experiencing a mutual occurrence of maintenance and restart. The overall operating rate in the first half of the month was close to 70%, which was relatively stable compared to the previous period. As the end of the month approaches, companies are gradually entering maintenance plans, and the industry load during and after the long holiday is estimated to be around 65%. The current weekly average production is less than 700000 tons, and the inventory position continues to decline, resulting in less than 490000 tons being at a low level. Overall, the slow recovery of supply and low inventory levels have provided some support for spot prices, and the supply side’s support for spot prices is still acceptable.
In terms of demand:
In September, polypropylene consumption was in the traditional peak season, and demand gradually moved out of the off-season, with downstream markets in the industry slowly following suit. However, due to the off-season situation on the cost side in the early stage, coupled with the fact that PP spot prices have risen to a high level, buyers’ acceptance of high priced goods is insufficient, and the overall trading atmosphere is cautious. The terminal enterprise strategy tends to be on-demand, with mostly scattered small orders and poor enthusiasm for building warehouses on site, resulting in generally low inventory levels. The operating rate of small and medium-sized enterprises has slightly improved, with downstream loads at around 45% at the end of the month, and overall demand side support for PP.
Future forecast
In September, the domestic PP market prices surged and then stabilized. From a fundamental perspective, the cost side rose and then fell, while the demand side saw a moderate increase in pre holiday stocking of orders. Currently, stocking has ended, and downstream operations have returned to caution. Analysts believe that the current demand in the PP market is limited, and the cost value is falling back. However, the contraction of the supply side has a certain boost to prices, and it is expected that the PP market will enter a stalemate in the future.
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