SunSirs: Strong Expectations and Weak Reality, China PP Market is Weak in the First Half of August

https://www.chemnet.com   Aug 15,2024 SunSirs

According to the Commodity Market Analysis System of SunSirs, the PP market continued its weak consolidation trend in the first half of August, with prices of various brand products experiencing a narrow decline. As of the afternoon of August 15th, the mainstream offer price for wire drawing by domestic producers and traders was around 7,785.71 RMB/ton, with a decrease of -0.55% compared to the beginning of the month.

In terms of raw materials: At the beginning of the month, the international crude oil market experienced a sharp rise in prices due to the unexpected continuous decline in US inventories and the escalating tensions in the Middle East. But recently, the International Energy Agency's monthly report predicted that global oil demand growth will still slow down to below 1 million barrels per day in the next two years, causing market stagnation and volatility. However, there is still a possibility of a rebound in the current trend supported by OPEC+ production cuts and the traditional peak season in the United States. The circulation speed of propylene supply is average, and the overall price has declined. The demand for propane is also weak due to pessimistic downstream purchasing sentiment, and there is room for price looseness. Overall, the support for PP from various raw materials has been relatively flat recently, slightly weaker compared to the beginning of the month.

In terms of supply: In the first half of August, the load level of domestic PP enterprises continued the previous pattern of large stability and small fluctuations. Recently, there has been a slight decrease in equipment maintenance compared to resuming work, resulting in a narrow increase in supply. The current industry load is about 75% or more, and there is still news of new equipment being put into operation at the end of the month, with expectations of an increase in future production levels. At the same time, the overall inventory of two polyolefin oils has increased, and the factory pricing of enterprises has been narrowly lowered. Overall, the current on-site supply of goods remains abundant, with supply pressure steadily increasing.

In terms of demand: In the first half of August, there was no improvement in the demand side of PP, and the overall load of terminal enterprises remained stable at a low level. 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 low, with weak enthusiasm for replenishing inventory. The follow-up of downstream product orders by film companies is limited, and replenishment operations revolve around weak demand. The comprehensive operating rate of injection molding enterprises has also fallen at a low level. The trading atmosphere in the downstream market of PP is generally average, with limited new orders and mostly pre delivery contracts. Although the traditional peak season of "Golden September" is approaching, the market lacks guidance signals in the short term, and the demand side has poor support for the PP market.

Recently, there has been a narrow decline in the domestic PP market prices. From a fundamental perspective, the comprehensive support of upstream raw materials for PP is deadlocked, and the off-season market on the demand side is difficult to change. At the same time, there is an increasing trend of supply and demand in the future. The market is about to enter the traditional peak consumption season, and although there are expectations of a strengthening in spot prices, the current sentiment of spot offers has not yet been activated. New orders on the exchange still maintain a low-end position, with significant resistance to price increases. Overall, it is expected that PP industry players will focus on avoiding suspicion in the short term, and the market may continue to consolidate weakly.

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