According to the Commodity Market Analysis System of Shengyi Society, the PP market continued to consolidate weakly in early August, with prices of various brand products fluctuating narrowly. As of the afternoon of August 6th, the mainstream offer price for wire drawing by domestic producers and traders was around 7807.14 yuan/ton, with a weekly increase or decrease of -0.55%.
Price trend
In terms of raw materials:
At the end of last month, the international crude oil market experienced frequent fluctuations, which affected market confidence and led to a decline in prices. Due to the unexpected continuous decline in US crude oil inventories and the escalating tensions in the Middle East, many industry players are bullish on the future. At the same time, after the previous price loosening, there was trading volume, and OPEC+’s stance on reducing production was firm. The expected rise in international oil prices is favorable for PP. The flow rate of downstream propylene sources is generally average, and prices have fluctuated and adjusted overall. In terms of propane, due to the rise in liquefied gas prices, propane has been pulled up and strengthened, while PDH production costs have improved. Overall, there has been a slight improvement in the support for PP from various raw materials recently.
Supply side:
At the beginning of August, the load level of domestic PP enterprises reached an average of over 70% of the previous operating level. Recently, there have been fewer short repair messages compared to resumption of work, leading to an expected increase in supply. The current industry load is around 75%. The production level is generally stable, the inventory of wire drawing materials has increased, and the factory pricing of enterprises has been narrowly lowered. At present, the on-site supply of goods remains abundant, and the supply pressure is stable with some increase.
In terms of demand:
At the beginning 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 and narrow, with weak enthusiasm for replenishing inventory. Due to the high raw material prices and slow cost transfer, the direction of membrane enterprises has resulted in low profit margins, leading to replenishment operations centered around essential needs. 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. The demand side has poor support for the PP market.
Future forecast
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 has slightly rebounded, and the off-season market on the demand side is difficult to change. At the same time, there is a trend of increasing supply and demand in the future. In August, there is a demand for moving warehouses and changing months in the market, which activates the entry of funds and drives the basis to strengthen. Although some spot trading sentiment has been activated, there is poor trading on the market, with new orders trading around the low-end position, resulting in significant resistance to price increases. Overall, it is expected that the PP market will continue to operate weakly in the short term.
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