SunSirs: Supply Growth Falls Short of Expectations, China PP Consolidation Tends to be Stronger in early December

According to the Commodity Market Analysis System of SunSirs, the PP market was mainly consolidated in early December, with some brand products experiencing price increases. As of December 10th, the mainstream offer price for wire drawing by domestic producers and traders is around 7,641.67 RMB/ton, a rise or fall of +0.27% compared to the price level at the beginning of November.

In terms of raw materials: In terms of international crude oil, the previous oil prices were affected by various factors such as the US election, resulting in low prices. Currently, the bearish effect has weakened, and the positive impact of the OPEC+production reduction plan delay is still present. International oil prices have rebounded from the decline, strengthening support for PP's upstream in the far end. In terms of propylene, local areas such as North China have tight supply, while downstream operating rates have rebounded. Supported by this, propane has shown a stable but slightly upward trend in the past ten days. PDH has been operating steadily due to the overall low inventory in the industry. Overall, in early December, PP raw materials remained stable with small increases, and the cost support was still acceptable.

In terms of supply: In early December, domestic PP enterprises experienced a combination of maintenance and production, and the overall load level continued the stable trend of the previous period. Enterprises such as Shaoxing SanRMB and Donghua Energy have successively entered the maintenance task within the interval. The first phase polyolefin project in Baofeng, Inner Mongolia, includes the commissioning of a 50 ton/year polypropylene production line and an increase in the load of ZhongRMB Petrochemical. Overall, the industry's overall load has only decreased by 1% from around 75% at the beginning of the month. The domestic PP shipment volume is flat, and the inventory level is around 650,000 tons. Although the supply is still abundant, some new production facilities have been delayed, supporting the mentality of some operators. Overall, the supply side provides average support for PP spot prices.

In terms of demand: At present, the demand side of PP tends towards rigid demand. Due to seasonal factors, the consumption level of woven bags such as fertilizers, cement, and rice remained stable with a slight decrease during the first ten days. The consumption level of plastic weaving has also declined narrowly, and the willingness to hold positions has cooled down; As the end of the year approaches, the decline in enterprise construction and stocking up are intertwined. The release of demand for partial pre holiday replenishment has to some extent boosted consumption. Overall, the demand side tends to have weak fluctuations in most aspects.

In early December, the domestic PP market prices saw a narrow upward trend. Fundamentally speaking, the overall performance of upstream raw materials in supporting PP is still acceptable. The supply within the range has leveled off, but some of the equipment put into production has been delayed to boost the confidence of regular operators. According to consumer feedback, businesses are cautious about future terminal consumption, and there is a risk of further contraction in subsequent orders. In the short term, it is expected that PP prices will remain stagnant.

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