Overview

This week, the polypropylene market has remained stable. Crude oil has shown weak trends due to the clarity in the Russia-Ukraine negotiation situation and the range of OPEC+ production increases, creating a negative feedback on market sentiment from the cost side. In terms of fundamentals, the maintenance season is gradually approaching, with several units such as Jinneng Chemical and Zhongjing Petrochemical undergoing repairs, leading to a low operating rate of polypropylene production capacity. However, the successful commissioning of the third line at Baofeng in Inner Mongolia adds to the supply pressure for polypropylene. Demand support is still decent, as the demand for fast-moving consumer goods has improved and downstream operating rates have increased, resulting in good consumption of polypropylene raw materials. This week, both production enterprises and social inventories have been reduced. Therefore, the current contradictions in the polypropylene market are not prominent, and the price direction is unclear, continuing a consolidation trend. As of the 27th, the national average price for drawing materials is 7,336 yuan/ton, an increase of 11 yuan/ton from last week, with a rise of 1.5%.

Recent attention points in the polypropylene market:

1. This week, China's polypropylene commercial inventory decreased by 7.81% compared to the previous period; total inventory of production enterprises decreased by 8.42%; inventory of sample traders decreased by 7.31%; inventory of sample port warehouses decreased by 2.92%. In terms of inventory by variety, the inventory of drawing grade decreased by 2.59%; the inventory of fiber grade decreased by 16.04%.

This week, domestic polypropylene production was 732,000 tons, a decrease of 600 tons or 0.08% compared to last week's 732,600 tons. Compared to the same period last year's 623,800 tons, it increased by 108,200 tons, a rise of 17.35%.

From March 21 to March 27, 2025, the loss amount of PP devices was 223,450 tons, a decrease of 0.37% compared to the previous week; among them, the maintenance loss was 156,120 tons, a decrease of 2.33% compared to the previous week; the reduction loss was 67,330 tons, an increase of 4.50% compared to the previous week.

1. Supply and demand deadlock seeks a breakthrough as market focus edges slightly higher by month-end.

The polypropylene market remained stable this week. Under the influence of Russia-Ukraine peace talks and the OPEC+ production increase, crude oil prices were weak, leading to a negative feedback effect on market sentiment from the cost side. Fundamentally, the maintenance peak season is gradually arriving, and with multiple facilities such as Jineng Chemical and Zhongjing Petrochemical undergoing maintenance, the utilization rate of polypropylene capacity has been low. However, the smooth commissioning of Inner Mongolia Baofeng's third line has made it difficult to alleviate the supply pressure of polypropylene; demand support remains acceptable, with fast-moving consumer goods demand improving and downstream operations recovering, resulting in good consumption of polypropylene raw materials. This week, both producer and social inventories have decreased; thus, there are no prominent contradictions in the current polypropylene market, and the price direction is unclear, maintaining a range-bound trend. As of the 27th, the national average price for injection molding grade polypropylene was 7,336 yuan per ton, an increase of 11 yuan per ton from last week, with a growth rate of 1.5%.

Table 1 Domestic Polypropylene Weekly Supply-Demand Balance Sheet

Two、Maintenance releases in bulk alleviate market downward pressure

Forecast: Next week, Yulong Petrochemical's Line 5 is scheduled to restart, while units such as Yangzi Petrochemical and Jinan Refinery are planned for maintenance. Additionally, concentrated shutdowns of facilities like the polyolefin line at Jingbo and the STPP line at Hengli Petrochemical toward the end of the week will drive the polypropylene maintenance loss volume higher again. Overall, since early April, polypropylene has gradually entered the peak maintenance season. With high maintenance activity, capacity utilization rates may remain low, and the average polypropylene capacity utilization rate for next week is expected to be around 75%.

1Downstream purchasing sentiment is weak, and commercial inventories have seen a slight reduction.

On March 26, 2025, China's total commercial polypropylene inventory stood at 858,600 metric tons, a decrease of 72,700 metric tons from the previous period, down 7.81% month-on-month. With increased maintenance shutdowns of upstream units leading to reduced supply, and intermediate traders completing their planned purchases by the end of the month, inventory shifted to the intermediate segments, resulting in a decline in producer inventories. Operating rates across downstream industries rose to varying degrees, boosting demand, and polypropylene trader sample inventories showed significant destocking. As shipping costs fell, domestic production and trade actively fulfilled previously contracted export orders, leading to reduced port inventories. Overall, the total commercial inventory declined this week.

2、Intensive maintenance releases from facilities.The capacity utilization rate of polypropylene has declined.

During this period (March 21, 2025 - March 27, 2025), the operating rate of polypropylene production capacity decreased by 0.56% month-on-month to 76.42%. The operating rate of Sinopec's production capacity fell by 1.63% month-on-month to 85.49%. This week, shutdowns at Jiujiang Petrochemical, Shanghai Petrochemical Line 1, and other facilities led to the decline in Sinopec's operating rate. Additionally, stoppages at Jinneng Chemical, Hebei Haiwei, Yulong Petrochemical Line 5, and other units contributed to the overall decrease in the average polypropylene operating rate.

Table 2 Weekly Production of Polypropylene in Various Regions of the Country

3Production demand failed to meet expectations, resulting in a slight increase in inventory for manufacturing companies.

On March 26, 2025, the inventory of polypropylene production enterprises in China stood at 641,700 tons, a decrease of 59,000 tons compared to the previous period, marking a month-on-month decline of 8.42%. With an increase in upstream maintenance and a reduction in supply, and as the end of the month approached, intermediaries completed their planned procurement, leading to a transfer of inventory to the intermediate links. Consequently, the inventory of production enterprises decreased this week.

Three、Demand-side follow-up is slow, and raw material restocking efforts fall short of expectations.

Forecast: The standoff between supply and demand continues, with a short-term gap in new capacity expansion and intensive maintenance, alleviating market supply and demand pressures. As market prices are close to costs, compressing market profits, cost-side support remains, locking in the market's bottom offers. Demand-side pressure from export tariffs suppresses market demand follow-up. Recently, the market has focused on export and maintenance variables guiding the market, with the short-term market expected to fluctuate around 7,280-7,450 yuan/ton, with a potential upward shift in the low-price center at the beginning of the month. Key attention should be paid to the impact of overseas tariffs on product export variables, downstream operations, and demand-side variables.

The plastic weaving industry is moving forward steadily, with the operating rate remaining the same as last week.

This week, the operating rate of sample enterprises in the plastic weaving industry remained at 47.40%, unchanged from the previous week. From the perspective of raw materials, futures opened higher but oscillated downward during the week. The cost support from crude oil and propylene was lacking, and trade offers became more flexible. The change in the PP market on the raw material side provided limited cost support for plastic weaving. In terms of demand, as the weather warms up, the peak season for the plastic weaving industry becomes more evident, with a surge in demand from end markets such as agriculture and construction. The use of fertilizers has boosted the sales of fertilizer bags. Some construction projects have started, leading to a noticeable increase in orders for cement bags. Orders for large enterprises typically last around 10-15 days, while small enterprises receive orders sporadically. Currently, the sentiment among participants is positive, and the overall trading atmosphere in the market is active. However, with an increase in market supply, plastic weaving prices mostly remain stable or decline.

This week, BOPP prices remained largely stable with minor fluctuations. As of March 27, the mainstream price of thick-gauge film in East China was between 8,600-8,800 RMB/ton, unchanged from the previous period. PP futures saw a slight increase, while the spot market stabilized with minor adjustments. Petrochemical producers mostly maintained steady ex-factory prices, offering limited support on the cost side. Most BOPP manufacturers kept their ex-factory prices stable, with only a few adjusting by 50-100 RMB/ton. Due to weak downstream demand, BOPP manufacturers faced some pressure in securing new orders, and the order production cycle shortened compared to the previous period. Market sentiment remained cautious, with downstream buyers and traders showing limited willingness to purchase, leading to an increase in finished product inventories for manufacturers. During the week, the uptick in PP futures prompted some manufacturers to moderately replenish raw material inventories, showing a slight increase compared to the previous week. Based on feedback from manufacturers, there was insufficient guidance from market news, and amid the supply-demand standoff, BOPP prices mostly stabilized with minor adjustments. The previously relocated production facility in East China has now entered the trial operation phase, and market supply is expected to further increase in the future.

Four、Oil-based profits shrink, coal-based profits expand

Profit: In the short term, the落地of OPEC+ production increases and the risk of U.S. tariff policies are likely to bring bearish pressure, leading to potential downward space for international oil prices next week. For the power coal market, demand recovery is weak, power plants have high inventories, and replenishment demand is low. After the heating season ends, industrial electricity use will gradually recover, but non-power industries are in a traditional off-season, with bearish sentiment dominating the market. Currently, prices have already fallen somewhat, and under a supply-demand surplus backdrop, they may continue to probe for support in the short term. It is expected that thermal coal prices in the spot market may remain weakly stable. It is expected that profits for oil-based PP will be restored, while profits for coal-based PP will increase.

This week, the profits of coal-to and externally-sourced propylene-to-PP have recovered, while the profits of oil-to, methanol-to, and PDH-to-PP have declined. Market concerns about the potential supply risks brought by the U.S. strengthening sanctions against Venezuela and Iran, along with the ongoing instability in the Middle East. Coupled with the decline in U.S. crude oil and refined product inventories, all provided bullish support for oil prices, leading to a rise in international oil prices this week, and a decline in oil-to-PP profits. In the thermal coal market, power plant inventories are at a high level, and the inventory at the Bohai Rim ports has exceeded 32 million tons, increasing the pressure on traders to sell off. The supply of coal in the market far exceeds demand, causing thermal coal prices to continue to fall, leading to an increase in coal-to-PP profits.

Five.Supply and demand are in a stalemate as the market awaits favorable developments.

Table 3 Domestic Polypropylene Supply and Demand Balance Forecast