Polypropylene (PP) 2023 Week41 Price Index

Price Index

PP Price Index

PP Price Index

ApplicationWeek 37, 2023
Week 38, 2023
Week 39, 2023
Week 40, 2023
Week 41, 2023
Low Melt1122.741125.191110.131101.411076.07-25.34USD/ton

Market Overview

This week, PP Price Index in China continued to decline, with prices clearly shifting downwards. As of Thursday this week, the average price for PP filament in East China was 1048.77 USD/ton, a decrease of 27.70 USD/ton compared to the pre-holiday week, representing a decline of 2.41%. The decline in prices widened compared to the previous week. The regional price difference for filament is not significant, and in terms of varieties, the price difference between filament and low melt flow has narrowed. The lack of fundamental support after the holiday, combined with the downward pressure from PP futures, has led to continuous declines in the price of low melt flow, with a cumulative decline greater than that of filament. The reduction in maintenance of existing facilities this week, along with the addition of new production capacity, has increased the spot supply in the front-end market. Actual downstream demand has increased to some extent, but due to the downward pressure from PP futures and cautious sentiments among market participants, the market sentiment has cooled further. At the same time, petrochemical companies are slowly reducing their inventory and gradually lowering factory prices, weakening the support from cost of goods. Overall, the combination of strong supply fundamentals and weak demand, coupled with the downward trend in PP futures, has put downward pressure on spot prices. Downstream end-users are entering the market cautiously, procuring in small quantities to meet essential needs.

Market Outlook

This week, PP Price Index in China experienced a downward shift, and it is expected to remain weak and consolidate next week. Taking East China as an example, the projected price range for filament is expected to be between 7450-7650 CNY/ton, with an average price of around 7600 CNY/ton. The projected price range for low melt flow is expected to be between 7600-7800 CNY/ton, with an average price of around 7750 CNY/ton. It is anticipated that oil prices will fluctuate and have limited impact on the cost of PP.

From a supply and demand perspective, we expect a decrease in overall facility maintenance next week, resulting in a slight increase in supply. On the demand side, downstream inventories are currently low, leading to restocking demand. However, considering the cautious sentiment among downstream buyers and the short procurement cycle, we expect the release of demand to be limited, making it difficult for the market to find significant support. Based on this, we predict that the downward trend in the PP market will slow down next week, with a weak adjustment as the main trend.

Regarding supply, the reduction in facility maintenance will contribute to a slight increase in supply. There will be no new production capacity released next week. In terms of facility maintenance, there are noticeable planned maintenance activities, resulting in an expected increase in supply. We estimate that the loss from PP maintenance next week will be around 68,400 tons, a decrease of 0.87% compared to this week. Major production companies have seen a limited reduction in inventories during the week, but they remain higher than the same period last year. In the short term, due to weak demand, we expect that major production companies’ inventories will accumulate slightly, weakening the market support. Traders’ inventories are also affected by weak demand, but we expect the decline next week to be limited. As for port inventories, with the gradual arrival of post-holiday shipments and no improvement in domestic demand, we anticipate that port inventories will accumulate at around 18,000-20,000 tons.

In terms of demand, there is limited growth in new orders from downstream industries, and cautious procurement is observed, resulting in limited demand release. Currently, downstream industries are mainly adopting a cautious approach due to limited new orders and lower raw material prices. Although there is a need for restocking due to low inventory levels, we expect the demand release to be limited. The purchasing intentions and pace suggest that essential needs will remain the primary focus, and we anticipate relatively limited market support from demand.

Looking ahead to next week, we expect oil prices to fluctuate and consolidate, with an average price of around $82 per barrel for WTI crude oil. The recent increase in oil prices was driven by the confidence boost from Saudi Arabia’s extension of production cuts and the risk of inventory squeeze caused by low levels of U.S. petroleum inventories. However, with Saudi Arabia stepping in to stabilize the oil market and the accumulation of oil inventories due to reduced refinery operations in the United States, these two positive factors have diminished, and oil prices have returned to normal price fluctuations. Market expectations suggest that the three major monthly reports will remain neutral, and there won’t be significant changes in the supply tightness or demand weakening in the oil market. Therefore, we expect oil prices to maintain a volatile trend, with limited impact on the cost support for PP.

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