Feb PP Demand Probably to Resurge
Preface: The New Year’s Day holiday and Spring Festival holiday were both in January 2023. Therein, nationwide logistics were halted, and lots of downstream enterprises suspended production before the Spring Festival holiday. Stagnant demand put a dampener on the overall trading atmosphere. PP downstream fields were wide, involving packaging, medical treatment, agriculture, building, automobile, home appliance, etc. The food, clothing, housing and transportation in our daily life are inseparable from PP.
The PP demand in major downstream fields was analyzed as follows:
According to SCI, the average operating rate at plastic woven enterprises decreased by 13% M-O-M and 15% Y-O-Y to 29%. That was 33% lower than the highest level in the same period of previous years. The Spring Festival in 2023 was moved up to mid-January, and a lot of plastic woven sample enterprises entered the Spring Festival holiday earlier given inadequate orders and slim profits. Thus, the plastic woven industry performed weakly, dragging down the PP consumption.
The average operating rate at injection product enterprises declined by 17% M-O-M and 13% Y-O-Y to 33% in January. That was 27% lower than the highest level in the same period of previous years. Some small and medium-scale enterprises curtailed operating rates or took a holiday in advance because of softened orders. Comparatively, large-scale enterprises maintained relatively stable operating rates, but most of them closed units during the holiday. After the holiday, the overall operating rate was low as downstream enterprises resumed production slowly. Thus, the PP demand from injection product enterprises was also insipid.
At BOPP enterprises, the average operating rate dropped by 10% M-O-M and 11% Y-O-Y to 49% in January. That was 15% lower than the highest level in the same period of previous years. Among 31 sample enterprises, around 68% of BOPP enterprises choose to suspend production during the Spring Festival holiday, and the shutdown mostly lasts for 7-10 days. The overall demand for PP was also mediocre.
According to SCI’s research, most of the downstream enterprises plan to resume business in the first half of February. Several enterprises have resumed production at present. Generally, downstream operating rates were low in January 2023, showing notable M-O-M and Y-O-Y declines. Operating rates may climb step by step with downstream enterprises restarting units in February, indicating that PP demand may bulge steadily.
Market players hold diversified stances about the future demand for PP. Some players consider the weakest demand has passed, and PP demand will probably rebound with downstream enterprises resuming business. But some other players hold a cautious attitude and lack confidence in demand recovery, as they think the relatively high inventories of finished products at downstream enterprises may dent the demand for PP. According to SCI’s research, downstream enterprises are likely to resume production successively from the Lantern Festival (February 5), indicating that downstream operating rates will grow steadily. The downstream demand is the curtail factor for the PP market, so participants are recommended to focus on new orders of downstream enterprises.
All information provided by SCI is for reference only, which shall not be reproduced without permission.
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