The domestic PP market remained positive in the first half of September, with prices of various grades of products increasing. As of September 14th, the benchmark price for PP wire drawing was quoted at 10100 yuan/ton, an increase of 5.83% compared to the beginning of the month.
price trend
In terms of raw materials:
The situation in the Middle East was turbulent in the first half of September, making it difficult to implement a ceasefire agreement. The shipping risks in the Strait of Hormuz have risen, and there are concerns in the market about international crude oil supply. Geopolitical premiums continue to rise, and the remote cost value of PP has risen at a high level. Within the range, propylene also rose due to the boost from the rise in crude oil. The downstream demand has slightly improved, and although the supply of propylene has increased, it has risen to a high level due to the dual benefits. Combined with the rise of thermal coal, the raw material side provided strong support for PP in the first half of September.
Supply side:
In September, domestic PP enterprises experienced a combination of maintenance and restart, with an overall operating rate of nearly 70%, which was relatively stable compared to the end of last month. Recently, enterprises in Guangxi, Dongguan, and other regions have plans to increase their load, and there are expectations of a slight increase in supply in the future. The current weekly average production is still around 720000 tons, and the inventory level is relatively low at around 540000 tons. Overall, the slow recovery of supply and low inventory levels have provided some support for spot prices, and the supply side’s support for spot prices is still acceptable.
In terms of demand:
The current consumption of polypropylene is in the traditional peak season, and demand has gradually emerged from the off-season level since the beginning of the month, with downstream markets in the industry slowly following suit. However, due to the off-season trend on the cost side and the fact that PP spot prices have risen to a high level, buyers’ acceptance of high priced goods is insufficient, and the overall trading atmosphere is cautious. The terminal enterprise strategy tends to be on-demand, with scattered small orders and poor enthusiasm for building warehouses on site. The operating rate of small and medium-sized enterprises has slightly improved, and the downstream load is slightly higher than 45%. Overall, the demand side provides moderate support for PP.
Future forecast
In the first half of September, the domestic PP market saw a significant increase in prices. Fundamentally speaking, the cost side is strong, but it also puts pressure on PP’s off-season cost values. Moderate increase in demand side orders, cautious downstream operations. PP analysts believe that the current PP market is mainly boosted by cost values, while also benefiting from the traditional peak season and tight supply balance. Suggestions for the follow-up direction are to pay attention to the situation of device return and the US Iran situation in the Middle East.
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