SunSirs: Cost Loosening & Off-season Consumption, China PP Market is Weak in July

https://www.chemnet.com   Jul 31,2024 SunSirs

According to the Commodity Market Analysis System of SunSirs, the PP market in July saw a decline after consolidation, with the price drops of various brand products concentrated in the second half of the month. As of the afternoon of July 30th, the mainstream offer price for wire drawing by domestic producers and traders is around 7,850 RMB/ton, a decrease of -1.70% compared to the price on July 1st.

In terms of raw materials:

Due to the impact of various production cuts and the peak consumption season in the United States at the end of last month, international crude oil was at a high level. The price adjustment in mid to late July was weak, and market operators were bearish due to frequent price fluctuations. However, after the price loosened, there was trading volume and the overall decline was limited. The circulation speed of downstream propylene sources is average, and the overall price fluctuates and falls. In terms of propane, due to the rise in liquefied gas prices, propane has been pulled up and strengthened, while PDH production costs have improved. Overall, there has been a slight loosening of the support for PP from various raw materials recently.

In terms of supply:

In July, the load level of domestic PP enterprises reached an average of 70% of the previous operating level. There were some equipment short repairs during the month, but they were worn down by the resuming equipment, and the industry load was around 73% at the end of the month. The production level is generally stable, with a narrow increase in inventory and a narrow decrease in factory pricing for enterprises. At present, the on-site supply of goods remains abundant, and the supply pressure is stable with some increase.

In terms of demand:

The demand side of PP performed poorly throughout July, and the overall load of end enterprises remained stable. Among them, the consumption of woven bags such as fertilizers and cement is at a low season level, and the operating rate of plastic weaving enterprises is relatively low at 40%, with weak enthusiasm for replenishing inventory. Due to the high raw material prices and slow cost transfer, the direction of membrane enterprises has resulted in low profit margins, leading to replenishment operations centered around essential needs. The comprehensive operating rate of injection molding enterprises is 50%, basically flat. The trading atmosphere in the downstream market of PP is generally average, with limited new orders and mostly pre delivery contracts. The demand side creates a certain drag on the PP market.

At the end of the month, the domestic PP market prices still showed a downward trend. The comprehensive support for upstream raw materials is loose, and PP demand is at a low season level. Short term gains are unlikely to materialize, and the supply and demand in the future will stabilize, making it difficult to change the consumption pattern in early August. Overall, it is expected that the PP market will continue to operate weakly in the short term.

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