SunSirs: Market Returns to Supply and Demand Guidance, China PP Price Stagnates and Rebounds

https://www.chemnet.com   Oct 21,2024 SunSirs

According to the Commodity Market Analysis System of SunSirs, the PP market weakened after a stalemate in mid October, and prices of various brand products fell back. As of October 18th, the mainstream offer price for wire drawing by domestic manufacturers and traders is around 7,642.86 RMB/ton, with a rise or fall of +0.66% compared to early October.

In terms of raw materials: In terms of international crude oil, although there was a significant surge during the National Day holiday and the market was enthusiastic, the recent geopolitical situation is expected to stabilize, and consumption is becoming increasingly weak. Therefore, the market has turned into a weak pressure, and the upstream support of PP has fallen back. In terms of propylene, it followed the upstream trend in the early stage, but with the gradual caution in chasing high consumption, there was also a situation of stagflation and correction this week. In the early stage, domestic supply of methanol recovered, and prices fell narrowly. After the stalemate in propane, prices loosened and followed the trend of oil prices, but the high prices in foreign markets supported the narrowing of the decline in domestic spot prices. The cost support for PDH production and methanol to PP production is also relatively weak. Overall, in mid October, the support for PP from various raw materials was weak and moderate.

Supply side: In mid October, the load level of domestic PP enterprises was slightly reduced due to the release of equipment maintenance plans by some enterprises. Enterprises such as Guangzhou Petrochemical, Hainan Refining and Chemical, and Daxie Petrochemical have their facilities undergoing maintenance within the area, and the maintenance production lines are concentrated in the southern region of China. The industry load has been reduced from 77% to around 75%. At present, the inventory of two barrels of PP oil in China is stable at around 810,000 tons, which has been digested compared to the first ten days. The on-site supply is still at a sufficient level. Overall, the supply side provides sufficient support for PP spot prices.

In terms of demand: In October, there was a certain increase in demand for PP, with the load on end enterprises rising. The consumption of woven bags such as fertilizers, cement, and rice continued to increase, and the willingness of plastic weaving enterprises to build warehouses increased narrowly. The downstream consumption of PP non-woven fabric has increased synchronously. However, with the improvement of macro commodity market sentiment and the exhaustion of positive factors, chasing high orders has returned to caution, and the market momentum has stopped heating up due to its impact. The demand side's support for PP spot has declined slightly.

After a stalemate in the PP market in China in October, prices declined. From a fundamental perspective, the comprehensive support of upstream raw materials for PP is average, and the bullish trend on the demand side has weakened. The initial increase has to some extent suppressed domestic trading, and currently merchants mainly engage in price reduction, order placement, and volume trading operations. The future guidance will mainly be driven by loose funding policies and the struggle for industry expansion in the fourth quarter. In the short term, it is expected that PP prices will mainly stabilize and operate.

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