September 25, 2024 – The PP (Polypropylene) market has recently exhibited a short-term volatile adjustment pattern, with production enterprises grappling with inventory backlogs amidst a relatively abundant market supply. Although traders have adopted proactive strategies, offering concessions to facilitate shipments, terminal demand has not shown significant fluctuations. The momentum for replenishment remains weak, and demand follow-up lags behind.
Amidst international financial developments, the news of the Federal Reserve’s interest rate cut has injected new vitality into the market, leading to a sustained surge in international oil prices. This, in turn, has provided a more solid foundation for cost support. Driven by multiple favorable factors, overall market prices have shown an upward trend. As the market gradually enters the traditional “Golden September” peak season, the overall transaction atmosphere has improved.
According to AsiaMB’s sources, the upward adjustment of international oil prices has undoubtedly brought a certain level of cost support to the PP market. However, despite the slowdown in market price declines, the enthusiasm for demand-side stockpiling has not met expectations, and the supporting effect on the market remains limited. It is predicted that in the coming period, the cost end will maintain a strong volatile trend, while the stimulatory effect of the “Golden September” peak season may trigger some market demand expectations.
From the supply side, facilities that were previously suspended due to maintenance have resumed production in succession, with output gradually increasing. However, supply-side pressure still exists, and the contradiction between supply and demand continues to be a game of tug-of-war. Data shows that domestic polypropylene production has reached 690,200 tons, an increase of 51,400 tons or 8.05% compared to the same period last year. It is expected that the supply side will maintain a stable operational trend in the short term.
On the demand side, while the PP market remains generally stable, concerns about market prospects persist among industry players. To promote shipments, merchants have adopted low-price concession strategies. However, current downstream order volumes are modest, with limited replenishment capabilities. Factories mostly maintain just-in-time inventory, and market sentiment is cautious. The average operating rate of downstream PP industries has fallen by 0.08 percentage points to 50.41%, which is 3.58 percentage points lower than the same period last year. It is predicted that in the coming period, downstream demand may show some upward momentum, with orders gradually recovering.
In summary, the current PP market is still in a short-term volatile consolidation trend, with production enterprises accumulating inventories and abundant market supply. Although traders are actively offering concessions to facilitate shipments, terminal demand has not changed significantly, and the enthusiasm for replenishment remains low. However, with the arrival of the peak season and the increase in demand-side load, demand may improve. Meanwhile, the rise in international oil prices has provided strong support for the cost end. It is predicted that in the short term, market prices will slowly rise after fluctuating within the low range of 7,400-7,550 yuan/ton. Future attention should be focused on changes in social inventories and demand-side dynamics.