Q2 2025 China PP Prices to Spiral Downwards
Continuous capacity release to drive up PP supply
In Q2, there may be seven production lines to be put into use, with capacity totaling 3,255kt/a. Therein, the third line at Inner Mongolia Baofeng Coal-Based New Materials has produced qualified products. The first production line with capacity of 150kt/a at Shandong Jincheng Petrochemical came on stream in the middle of April and produced BZ-70. The first line with capacity of 480kt/a and the second line with capacity of 475kt/a at ExxonMobil Chemical were put into use in late April and produced raffia 2232E1. Shandong Yulong Petrochemical may put new unit into operation at the end of this quarter.
Q2 2025 China PP Capacity Expansion Plans
Regarding unit maintenance, there is currently a relatively high number of existing PP units undergoing maintenance. Q2 is traditionally a peak season for maintenance, with newly added shutdowns concentrated in April and May. However, most of these units are expected to resume operations in June.
Overall, supply-side pressure is projected to gradually intensify in Q2. The concentrated maintenance activities from April to May partially offset the pressure from newly commissioned units, but the combined effect of capacity expansion from multiple new units and the restart of closed units will lead to a steady increase in supply pressure.
China PP Unit Maintenance
Remarks: RS = restart, SD = shutdown
Methodology: The output loss above refers to the affected output due to maintenance at producers during the week with a sample coverage rate of 100%. It is calculated via multiplying daily output by maintenance days.
Demand likely to soften gradually with the demand off-season drawing near
On the demand side, the overall operating rate in PP downstream industries is expected to remain relatively high in April. Orders for film and daily necessities are projected to stay resilient, with plastic woven bags and films continuing to dominate PP consumption. Demand is supposed to release steadily. However, as temperature rises and rainy weather increases, PP demand will gradually enter a dull season. Operating rates in some downstream industries may decline, leading to softer demand for PP from May to June.
PP prices predicted to fall after rising amid higher fundamental pressure
China’s PP prices will probably see ups and downs in Q2 2025. The global trade tensions persist now, but there may be uncertainties in tariff. Market players mainly stay on the sidelines. China’s PP market prices trended downwards in April 2025, as insipid demand dampened the trading atmosphere and PP prices, even though supply reduction and limited inventory pressure supported the PP market slightly. As of April 28, the average price of PP raffia in East China was RMB 7,283/mt, down 0.87% MOM and 3.79% YOY. The tariff change compounded the market unease, and international crude oil values and PP futures prices went down, dragging spot PP prices down. Subsequently, as updates continued to emerge regarding the U.S. suspending tariff increases and expectations of easing U.S.-China tariff tensions, international crude oil prices rebounded slightly and then moved sideways, alleviating the pessimistic sentiment somewhat. The PP futures and spot prices rallied but then performed weakly. For fundamentals, the downstream demand for PP was lackluster with the demand off-season drawing near and certain bearish expectations for tariff impacts, while PP supply declined amid more unit maintenance, and raffia supply was even tight in some markets. Thus, the price drop slowed down in late April.
China’s PP prices will probably drop at first but then move sideways in May 2025, with mainstream prices edging down. Crude oil prices are likely to fluctuate downwards, reflecting softer cost support for PP prices. As for fundamentals, the overall PP supply pressure may not be high with intensive maintenance offsetting some effects brought by capacity release, while the downstream demand may stay weak. Thus, PP prices may decline slowly and slightly in May. From June to July, PP supply is projected to bulge because of continuous capacity expansion and restarts of closed units. The downstream demand may still be below average during the off-season. Mainstream prices of PP will probably further move down. In the import market, import volume may further decrease because it is hard for the phenomenon that China’s PP prices stay at a global low to change, and the domestic demand is likely to stay insipid. In summary, the overall PP supply is unlikely to be plentiful. On the export front, overseas supply recovery and persistently subdued demand are expected to hinder PP exports, resulting in a modest decline in export volume.
In June, PP mainstream prices are likely to further dip amid soft fundamentals. Sinopec Zhenhai Refining & Chemical and Shandong Yulong Petrochemical may put new units into operation, and the existing unit maintenance may soften, which may push up PP supply pressure. The downstream industry operating rates is likely to further ratchet down with the weather getting hotter and hotter, hindering the PP consumption volume. The gap between supply and demand may widen to 236kt. The monthly average price of raffia may be RMB 7,230/mt and RMB 7,200/mt separately from May to June 2025.
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