SunSirs: Production and Maintenance Coexist, China PP Market is Sorted

According to the Commodity Market Analysis System of SunSirs, the PP market was mainly consolidated in mid December, with some brand products experiencing price increases. As of December 17th, the mainstream offer price for wire drawing by domestic producers and traders is around 7,641.67 RMB/ton, an increase or decrease 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 supply risk has increased due to the geopolitical situation in Syria. At the same time, the positive impact of the OPEC+production reduction plan delay is still present, coupled with the expectation of increased demand in Asia, international oil prices have recently fluctuated and risen, strengthening support for the upstream of PP in the far end. In terms of propylene, the tight supply in North China has improved, and the favorable supply has weakened, resulting in a decline in prices. Propane is operating steadily in response to the trend of crude oil, PDH remained stable at a high level due to its influence. Overall, the recent trend of PP raw materials is still acceptable, and the support on the cost side is also acceptable.

In terms of supply: In December, there was a mutual occurrence of maintenance and production of PP enterprises in China, and the overall load level continued the stable trend of the previous period. Jincheng Petrochemical, Dalian Hengli and other enterprises have newly put into operation facilities, but some of them have stopped again after being put into operation. However, when companies such as Hai Tian Petrochemical entered the maintenance task, overall, the industry's overall load only saw a narrow decline from nearly 75% in the first half of the year to around 73%. The domestic PP shipment volume is flat, with a weekly output of about 670,000 tons. Although the supply is still abundant, some newly put into operation facilities are unstable, 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 slow release of some pre holiday replenishment demand has to some extent boosted consumption. Overall, the demand side tends to have weak fluctuations in most aspects.

The PP market prices in China remained stable in December. Fundamentally speaking, the overall performance of upstream raw materials in supporting PP is still acceptable. The supply within the range is flat, but the production situation of some of the put into operation equipment is unstable. According to consumer feedback, businesses are cautious about future terminal consumption and tend to focus on restocking for essential needs. In the short term, it is expected that PP prices will remain stagnant.

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