SunSirs: China PP Market Remained Stagnant in the First Half of November

According to the Commodity Market Analysis System of SunSirs, the PP market remained stable with small fluctuations in the first half of November, and prices of various brand products were mostly stable. As of November 13th, the mainstream offer price for wire drawing by domestic manufacturers and traders is around 7,585.71 RMB/ton, with an increase or decrease of +0.09% compared to the price level at the beginning of November.

In terms of raw materials:

In terms of international crude oil: The first half of November showed a pattern of first rising and then falling. The news that the OPEC+ 2.2 million barrels per day production reduction plan has been extended until the end of December is positive for international oil prices. On the other hand, the improvement of local economies in Asia has eased market panic on demand, boosting the international oil market. However, due to the disturbance of the US presidential election and the expected easing of the geopolitical situation, the recent crude oil change rate has remained negative, and the upstream support of PP has fallen. On the other hand, the positive effects of the previous supply contraction and increased demand for propylene are gradually dissipating, and the pursuit of high consumption is becoming more cautious. Recently, there has been a volatile pullback situation. The supply and demand of methanol have remained stable, with prices running at a stalemate. Propane is currently being suppressed by upstream trends and affected by abundant supply in the domestic market, with price consolidation being the main focus. Overall, in the first half of November, the raw materials for PP remained stable with some weakness, and the support on the cost side was average.

In terms of supply: Since November, the load level of domestic PP enterprises has been reduced due to the implementation of equipment maintenance plans by some enterprises. There are enterprises such as Daxie Petrochemical and Fujian United that have entered the maintenance stage for their equipment. Recently, both Zhejiang Petrochemical and Guangzhou Petrochemical have maintenance plans for some of their facilities, and production line maintenance is relatively concentrated. The overall industry load has decreased from 76.5% at the beginning of the month to below 75%. At present, the inventory of two barrels of PP oil in China is stable at around 720,000 tons, which has decreased compared to the previous period. But the supply is still at a sufficient level. Overall, the supply side provides sufficient support for PP spot prices.

In terms of demand:

In the first half of November, there were limited changes in the demand side of PP, and the load of end enterprises flattened. Although the consumption level of woven bags such as fertilizers, cement, and rice remains stable and the willingness to hold positions is strong, the warehousing of other downstream enterprises has generally declined. Both film and pipe companies have experienced a narrow contraction in their raw material inventory, which is beneficial for smoothing out plastic weaving. However, with the disturbance of the US election results, the decline in overseas commodities has triggered a reassessment of domestic assets, and market sentiment has warmed up, providing slight support for PP prices. Overall, the demand side is struggling with hedging in various aspects and generally stable.

The domestic PP market prices remained stagnant in the first half of November. Fundamentally speaking, the comprehensive support of upstream raw materials for PP is first strong and then weak, with demand side long and short hedging. The supply side maintenance is concentrated, but according to market feedback, there are concerns among industry players about the release of new production capacity in the future. In the short term, the market has been struggling with the game recently, and it is expected that PP prices will continue to consolidate and operate. It is recommended to focus on policy factors and upstream commodity prices in the future.

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