The domestic PP market rebounded in the first half of July. The prices of various brand products have increased significantly. As of July 14th, the benchmark price for PP wire drawing was quoted at 9093.33 yuan/ton, an increase of 14.53% compared to the beginning of the month.
price trend
In terms of raw materials:
Although there were frequent positive signals of high-level peace talks between the United States and Iran in the Middle East in June, the situation has fluctuated recently and the ceasefire has been affected. The risk of shipping recovery in the Strait of Hormuz has increased, and there are concerns in the market about international crude oil supply, leading to a rapid return of geopolitical premiums. International oil prices have rebounded, and the remote cost value of PP has strengthened; Propene is stimulated and upregulated synchronously. At the same time, the domestic supply has been affected by the parking of companies such as HSBC, resulting in a contraction of supply. Coupled with the recent frequent occurrence of export windows, the further digestion of domestic goods by exports, coupled with favorable guidance from the market, has led to a strengthening of prices. Overall, the raw material market has a positive impact on the cost of PP.
Supply side:
In the first half of July, the overall operating rate of the domestic PP industry remained low with a narrow increase. Market supply within the range is expected to relax. As of press time, the overall load of the domestic industry is over 66%, and the weekly output has rebounded to nearly 780000 tons. The current inventory position is around 540000 tons, and the overall supply of goods is abundant. Overall, the supply side has average support for spot prices.
In terms of demand:
The current consumption of polypropylene is still at a low season level, coupled with the compression of terminal profit margins due to rising costs, the downstream market of the industry remains resistant to high prices. However, the strengthening of cost value and futures basis simultaneously stimulates on exchange trading, activating some of the position building orders. Overall, the trading atmosphere tends to be cautious, with many buying small orders at low prices. The improvement in operating rates for small and micro enterprises is limited, while large and medium-sized enterprises continue to stabilize and digest, with a comprehensive operating rate of less than 45%. The overall situation on the demand side is weak, which provides poor support for PP.
Future forecast
In the first half of July, the domestic PP market prices rebounded strongly and rose. Fundamentally speaking, the geopolitical premium on the cost side has returned, the industry load has slightly rebounded from a low level, and the changes in port imports to the port are limited. The off-season market on the demand side continues, and it is difficult to increase volume in the short term. Business Society PP analysts believe that although there is a certain degree of supply-demand contradiction in the current PP market, it is rapidly rising driven by cost value.
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