[PP Daily Review] Demand Side Expectations Weaken, Polypropylene (PP) Prices Continue to Decline

1. Today's Summary

1. CNPC Southwest PP prices adjusted: Wire drawing down by 100 yuan/ton, Dushanzi S1003 listed at 6580 yuan/ton, BOPP down by 80 yuan/ton, Sichuan Petrochemical L5D98 listed at 6440 yuan/ton.

Today, the domestic polypropylene shutdown rate has decreased by 0.82% compared to last week, reaching 17.02%. Ningxia Baofeng's third line with an annual capacity of 500,000 tons has resumed operations, and Guangzhou Petrochemical's third line with a capacity of 200,000 tons has restarted, which is expected to increase daily supply by 1,050 tons. The daily production share of drawing has increased by 0.27% from last week, reaching 27.03%. This is mainly due to the conversion of Zhongtian Hechuang's 350,000 tons/year and Anqing Baiju's 300,000 tons/year facilities to drawing, which is expected to increase drawing output by 1,950 tons per day.

③、 The supply and demand balance in this period continues to be in a tight equilibrium. ， However, the negative value of the supply-demand imbalance continues to narrow, making it difficult to form effective support for market prices. In the next period, the supply-demand balance will narrow to near the equilibrium point due to a decrease in demand, having a very limited impact on the market situation.

2. Spot Overview

Data source: Longzhong Information

Today, polypropylene raffia in East China is priced at 6,308 yuan/ton, down 28 yuan/ton compared to last week. The national average price for raffia has decreased by 30 yuan/ton compared to last week, weaker than the morning expectations.

Futures opened lower and showed weak fluctuations today, with most market quotations dropping by 10-60 yuan/ton in the morning. Towards the end of the year, the significant return of market funds is limiting the circulation of goods. The sluggish economic environment has led industry players to lower their expectations for the future market, resulting in cautious low inventory and active sales. Although maintenance provides some positive support, it cannot reverse the large supply base of polypropylene. There is intense competition between supply and demand. It is expected that the market will show a weak downward oscillation trend in the near future. As of midday, the mainstream price of wire drawing in East China is 6,250-6,450 yuan/ton.

Figure 1 Domestic Polypropylene Price Trend (Unit: Yuan/Ton)	Figure 2 Domestic Polypropylene Price Trend by Region (Unit: Yuan/Ton)
Data Source: Longzhong Information	Data Source: Longzhong Information

3. Spot-Futures Basis

In terms of basis, today the polypropylene basis in East China is 42 yuan/ton, an increase of 17 yuan/ton compared to last week; the basis in North China is -16 yuan/ton, an increase of 5 yuan/ton compared to last week.

Figure 3: Basis Trends in North China (Unit: RMB/ton)	Figure 4 Basis Trend in East China (Unit: Yuan/Ton)
Data Source: Longzhong Information	Data source: Longzhong Information

Production Dynamics

The polypropylene capacity utilization rate increased from 78.07% last Friday to 78.15%, up 0.08% compared to last week. Ningxia Baofeng's third line with an annual capacity of 500,000 tons has started up, and Guangzhou Petrochemical's third line with a 200,000-ton unit has been restarted, with an expected daily supply increase of 1,050 tons. The PP profit remained unchanged from last week at -611.21 yuan/ton.

Figure 5: Domestic Polypropylene Capacity Utilization Trend Chart	Figure 6 Domestic Polypropylene Profit Price Trend Chart (Unit: Yuan/Ton)
Data source: Longzhong Information	Data Source: Longzhong Information

Market Sentiment

Downstream new order follow-ups are limited, and merchants' cautious bearish sentiment is increasing. Upstream enterprises are actively adjusting prices to promote inventory digestion; middlemen are appropriately restocking based on progress, engaging in quick turnover. Downstream factories primarily maintain demand-based orders, and raw material restocking is done as needed.

6. Price Prediction

Downstream new order follow-up is sluggish, leading to a decrease in merchants' expectations for future demand, resulting in reduced market transactions and synchronized price declines. Although maintenance has somewhat alleviated the supply and demand pressure in the polypropylene market, the global economic downturn suppresses domestic product export orders and also exerts certain pressure on domestic demand. This leads to the primary operational mode of inventory reduction at the end of the year to promote transactions. In the short term, the expected reduction in maintenance losses will shrink, further escalating market supply and demand pressure. Under the supply-demand game, the market is expected to trend weakly downward in the short term, hovering around 6250-6450 yuan/ton.

7. Related Product Information

Table 2 Summary of Prices for Polypropylene-Related Products (Unit: Yuan/Ton)

Data Source: Longzhong Information

8. Data Calendar

Table 3 Overview of Domestic Polypropylene Data (Unit: 10,000 tons)

Data Source: Longzhong Information