Entering late September, the domestic PP market is consolidating at a high level, with prices of various grades of products fluctuating. As of September 24th, the benchmark price for PP wire drawing was quoted at 9883.330 yuan/ton, an increase of 3.56% compared to the beginning of the month.
price trend
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 recent days, Iranian President visited the United States to attend a meeting, and US President Trump publicly expressed his willingness to meet with Iranian President. At the same time, Iran has conveyed clear conditions to the mediator to restart negotiations, marking a substantial diplomatic breakthrough signal 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, propylene significantly followed the decline, and overall, the support for PP from the raw material side weakened in late September.
Supply side:
In late September, domestic PP enterprises experienced a combination of maintenance and restart, with an overall operating rate of nearly 70%, which was more stable than the previous period. The future supply changes are limited. The current weekly average production is still around 700000 tons, and the inventory level is relatively low at around 500000 tons. 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:
The current consumption of polypropylene is in the traditional peak season, and demand has gradually emerged from the off-season level since the beginning of the month, 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 approaching 47%, and overall demand side support for PP.
Future forecast
In late September, the domestic PP market prices stabilized at a high level. From a fundamental perspective, the cost side has experienced a high decline, while the demand side has seen a moderate increase in orders in the early stages. Recently, pre holiday stocking has basically ended, and downstream operations have returned to caution. PP analysts believe that the current PP market supply and demand are weak, coupled with the drag of cost value rebound, there may still be downward pressure in the future. It is recommended to pay attention to the industry production situation in October and the situation in the Middle East, the United States, and Iran.
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