According to the Commodity Market Analysis System of Shengyi Society, the domestic PP market fluctuated at a high level in early April, with prices of various brand products fluctuating. As of April 9th, the benchmark price for PP wire drawing offered by Shengyi Society is 9416.67 yuan/ton, an increase of 2.73% compared to the beginning of the month.
price trend
In terms of raw materials:
In the past March, due to geopolitical factors, the production and transportation of crude oil in the Middle East were both affected by force majeure. Combined with the firm stance of OPEC+production cuts, international oil prices have been pushed up. At present, the repeated ceasefire between the United States and Iran and the uncertainty of the situation continue to cause concerns among industry players, leading to high fluctuations in the remote cost value of PP. In the early stage of propylene production, the centralized maintenance of enterprise equipment has been implemented, and at the same time, the demand side has been steadily receiving goods. The effective supply in the market has decreased, but the digestion remains strong, and the price has risen at a high level. Although there has been a recent reduction in port arrivals for propane, overseas prices have been revised downwards at high levels, and the focus of domestic spot prices has loosened. Overall, the prices of various raw materials for PP have fluctuated, supporting high fluctuations in PP costs.
Supply side:
Entering April, domestic PP enterprises have concentrated their maintenance plans, and the overall operating rate has rapidly declined. As of the time of writing, the overall load level of the domestic industry is around 71%. At the end of March, the maintenance plans of 8 enterprises were gradually implemented. Recently, some companies have joined the ranks of parking maintenance, and the industry’s total loss of production capacity is at a historical high. The current weekly average total output is less than 690000 tons, and the inventory level has dropped below 700000 tons. The arrival of imported materials at the port has also significantly decreased. Overall, the supply side has strong support for spot prices.
In terms of demand:
Affected by high spot prices, the overall trading atmosphere in downstream markets of the industry has been cautious recently. In March, oversold contracts and chasing orders from refineries were basically delivered, but the current transaction pace has slowed down and warehouse building operations have decreased. Buyers often use and take as you go, with scattered small orders being the main focus. Some terminal small and micro enterprises have reduced production and stopped production due to high cost pressures, while large and medium-sized enterprises have stabilized their inventory. The overall demand side is in a wait-and-see situation, with performance falling short of market expectations and average support for PP.
Future forecast
In early April, the domestic PP market prices fluctuated at a high level. Fundamentally speaking, the industry’s load position is in the historical low range, and the import of goods from ports to ports has decreased. The inventory position is further digested, but under the large production capacity base, the source of goods can still meet the supply. At present, the comprehensive support of various upstream raw materials for PP cost has fluctuated, but it is still at a high level. Therefore, the PP analyst of Shengyi Society believes that the current PP market is mainly guided by the dual guidance of cost and supply, and the pressure of high cost value still has a restraining effect on the demand of small factories. The demand increment is lower than expected and it is difficult to further digest inventory. It is recommended to closely monitor the fluctuations in the crude oil market, as this may hinder the transmission of market trends and weaken future market action.
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