Import PP prices in China correct to May levels; will markets see further softening?

Import homo-PP prices in China have been on a stable to slightly lower trajectory since softening from a 16-month high in mid-June. The import PPBC market also remained stable at this peak for four straight weeks before a slight drop last week. Even though surging freight rates have still provided the markets with a robust cost support, sellers have failed to raise their offers for the past month due to weakening supply-demand dynamics.

The weakness in market fundamentals has raised concerns about a potential downtrend ahead. Several players expect the import PP markets to move sideways or post additional losses in the near future.

Offers at $900 CIF level reemerge for PPH

During the week ending on July 5, the overall range for import homo-PP raffia and inj. offers was stable to $10/ton lower from a week earlier, assessed at $900-1000/ton CIF, cash. The mid-point of this range suggests that homo-PP prices have dropped back to the levels seen in May.

Meanwhile, the PPBC grade saw the first downward revision since the beginning of the year. Import PPBC inj. prices for all origins were assessed stable to $20/ton lower from the previous week at $930-1030/ton on the same terms. As a result, the weekly average level of PPBC inj. imports edged down from its 16-month high, according to ChemOrbis Price Index data.



Poor supply-demand conditions cloud picture

Key price drags pointed to a slowdown in buying interest and a gradual expansion of availability, casting a shadow over the market outlook.

The off-season at most downstream sectors reduced buying enthusiasm for PP polymers, while the expected increase in customs duties on Chinese electric vehicles to Europe has exacerbated the demand slowdown. The preference of local products among buyers due to logistical challenges and more attractive pricing also contributed to the decline in demand for imports.

Supply has lengthened on the back of operation resumptions, with more plants restarting after the heavy turnaround season in the Middle East, Asia, and China itself. “Supply from Middle Eastern and Asian producers will increase, putting pressure on PP prices,” said a source at a Taiwanese producer.

The unfavorable supply-demand situations have worked against strong costs and dimmed players’ expectations for the short-term markets. “Soaring container freight rates have reinforced a cost foundation for import prices. However, market participants anticipate that the growing availability and faltering demand will lead to a downturn in the import markets. We see PP prices moving sideways or slightly downwards soon,” a trader reported.

Can more economic stimulus lift PP sentiment?

Market players are closely watching China’s state conference, which is expected to take place in mid-July and focus on the country’s economy. Expectations of more economic measures following the conference may aid sentiment to a certain extent, partially mitigating bearishness from supply and demand conditions.

A trader opined, “Macroeconomic policies and robust costs are the only positive catalysts relieving the market’s softening. Looking ahead, the key factors to watch include the impact of the third plenary session in mid-July and tariff increases on exports of Chinese goods such as electric vehicles. The short-term markets are expected to fluctuate around current levels.”