Jan PP Average Price Dipped amid Lackluster Downstream Demand
Highlights: China’s PP market prices rallied after drops in January 2023, while mainstream prices inched down. At first, PP prices slid because the futures prices and downstream demand underperformed. But later, the futures prices increased 8 times, booming the market sentiment, so suppliers raised offers continuously. The market demand for PP is supposed to resurge in February with downstream processors resuming business.
PP prices rose but then pulled back amid continuously weak demand.
As for PP raffia in East China, the highest price was RMB 7,975/mt in end-January, while the lowest price was RMB 7,550/mt at the end of H1 January. Prices of PP copolymer performed stronger than those of raffia, with price spread of RMB 175-325/mt. Specifically, the soft futures market dampened the market stances in H1 January, and the downstream weakened, so local producers and traders lowered their offers. In mid-January, there was speculative demand when PP prices declined. Market participants held a positive outlook about the future demand, and the futures prices continuously grew 8 times, which boosted the PP market price. However, deals decreased gradually near the Spring Festival with downstream plants and logistics enterprises taking a holiday. After the Spring Festival holiday, the holiday accumulation of inventory was less than expected. Local producers felt comfortable in inventory and raised their offers successively. The average price of PP raffia was RMB 7,741.88/mt in East China, down 0.80% M-O-M and down 7.56% Y-O-Y. Besides, PP copolymer prices averaged RMB 7,977.19/mt, down 1.29% M-O-M and down 6.98% Y-O-Y.
PP industrial chain products mostly saw price decreases, dampened by unsmooth demand transmission.
PP Industrial Chain Price
PP and its upstream and downstream products’ prices went to different directions in January, and prices of most products declined because of stagnant trading before the Spring Festival holiday. Therein, BOPP prices decreased the most, and PP and propane prices also headed down. However, crude oil values appreciated due to the bullish expectation for China’s economy. All PP industrial chain products saw a Y-O-Y price decrease, mainly as the time of Spring Festival holiday has moved up to mid-January this year, which dents the market demand.
Demand for PP may revive, as downstream enterprises will resume production after the Lantern Festival (February 5).
The downstream demand for PP is predicted to warm up in February 2023 with positive policies to be introduced. Market players hold a bullish outlook about the post-holiday PP demand. SCI learns that some downstream enterprises plan to resume production on January 31 or so, and several plastic woven enterprises have restarted units in advance given passable orders. Accordingly, the downstream demand for PP is expected to revive gradually. But some downstream enterprises have high inventories of finished products, and they face scant domestic orders and export orders, which will impair their initiatives in purchasing PP. The PP supply is supposed to register an uptick in February with capacity expansion and unit maintenance mixed, but the supply pressure may be slight. There will be fewer natural days in February compared with January, which will dent the overall PP output. Thus, PP supply may increase limitedly. Generally, SCI predicts that PP prices may level up within a narrow range. Participants are recommended to focus on PP unit dynamics, resumption of downstream production and new orders.
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