September 13, 2024 – The East China region, a pivotal market for polypropylene (PP) in China, typically exhibits moderate price levels, falling between those of the North and South China markets. However, since August 2024, a rapid expansion in production capacity has disrupted the market balance, causing PP filament prices in this region to dip below those of the nation’s other two major regions for most of the time. According to data from Jinlianchuang, the price of Fude T30S in the Zhejiang market was generally 20-80 yuan/ton lower than that of Shenhua S1003 in the Shandong market.
From the supply side, the reduction in maintenance activities among petrochemical enterprises in East China after July led to a significant increase in production. Specifically, production grew by 7.68% in July and an additional 1.55% in August. As of early September, the upward trend in production continued, exacerbating supply pressure. On the demand side, while PP demand in East China has consistently been robust, with a well-established chemical industry chain and stable demand from sectors such as appliances, packaging, and automobiles, the traditional peak season in September witnessed an unexpected slowdown in downstream demand in certain areas. This, in turn, depressed PP market prices, causing filament prices, in particular, to fall to the lowest level nationwide, even surpassing those in the North China market.
Recently, however, a series of positive developments have emerged on the supply front. On September 10, Kingfa Science & Technology’s first-phase 400,000-ton/year PP plant temporarily shut down due to unforeseen circumstances, with an expected downtime of over 15 days. This production line primarily affects the supply of high-melt copolymers, homopolymer injection molding, and fibers. With the plant’s shutdown, the planned production of high-melt copolymers will decrease, and there is uncertainty regarding whether the second line can switch to compensate for this reduction, providing a short-term boost for high-melt copolymer resources.
According to Color Masterbatch Industry News, Ningbo Daxie Petrochemical’s 300,000-ton/year PP plant is also scheduled to undergo maintenance from October 10, with an expected downtime of 1-2 months. This plant primarily produces 1102K, with a monthly supply of approximately 20,000 tons of filaments at relatively low prices. Therefore, the anticipated shutdown is expected to bolster low-priced PP filament offerings in the East China market.
Furthermore, Changzhou Fude’s 300,000-ton/year plant remains shut down due to propylene tail gas recovery and technical renovations, with no immediate plans for resumption of production. Similarly, Anqing Petrochemical’s 300,000-ton/year plant is also currently shut down, with no recent plans for restart.
Influenced by multiple factors, including supply and demand, PP prices in the East China market have experienced a notable decline recently. However, price-based transactions have remained satisfactory, with industry participants adopting a wait-and-see attitude rather than unilaterally pessimistic views. Traders have been moderately accepting shipments, maintaining inventory levels at a moderate range. Coupled with the frequent emergence of positive maintenance developments on the supply side, the market may be poised for a potential halt in its downward trend. In the future, further attention will be needed on crude oil price fluctuations and macroeconomic news.