PP markets quiet in China; sellers pin hopes on pre-CNY demand

The final days of the year have brought little change to China’s PP markets. While most sellers maintained their offers, supported by manageable supply pressures, some made minor downward adjustments to encourage year-end sales in the face of weak demand. In the meantime, the ongoing depreciation of the yuan against the US dollar gave exporters room to adjust prices downward to attract buyers.

Slight drops return to export market; local and import prices stabilize

For the week ending December 27, export homo-PP raffia and injection prices declined by $10/ton after a month of stability, with the price range assessed at $910-930/ton FOB China, cash. This marks the lowest weekly midpoint since July 2023, according to ChemOrbis Price Index data.

The weakening yuan, combined with the muted trading atmosphere at many export outlets due to the Christmas and New Year festive breaks, stayed behind the recent downward adjustments. B Sellers also cited buyers’ preference for lower offers, with decent demand reported from nearby Southeast Asia for competitively priced cargoes.

Locally, the market has remained rangebound over the past six weeks, while import prices stabilized following the previous week’s drops. January PP shipment offers from a major Saudi Arabian producer also indicated rollovers. The producer kept their latest homo-PP raffia offers unchanged from December at $890/ton CIF, cash.

Supply concerns temporarily eased

Concerns over China’s oversupply eased temporarily, thanks to delayed startups and ongoing plant turnarounds. This offered players some relief, at least for the near term.

ChemOrbis Production News Pro data reveal that several major PP projects in China, initially scheduled for launch during the fourth quarter of 2024, have been delayed due to unfavorable market conditions. Meanwhile, the total capacity losses remained high in December, a total of around 897,000 tons at the time of writing. This was an important factor leading to the significant reduction in the stock level at home, though demand was not that vivid. The domestic polyolefin inventories of China’s two major producers posted a weekly decline of 100,000 tons, to be reported at 495,000 tons as of December 27, according to market sources.

Pre-holiday demand expected to emerge

Buyers have been preparing for the upcoming Lunar New Year, but purchases have been limited to small volumes, resulting in pre-holiday demand falling short of expectations. This was largely attributed to weak end-user consumption, which dampened demand for finished goods and, in turn, raw materials like PP.

However, market players remain optimistic about a recovery. Downstream converters, who typically stockpile materials for post-holiday operations, have not done so yet this year. Many expect demand to pick up in the weeks leading up to the Lunar New Year.

“We expect that demand will increase slightly before the Spring Festival since converters will need to stock up for post-holiday operations,” said a trader.

The Spring Festival is the most important and widely celebrated holiday in China and other parts of Asia. It marks the beginning of the lunar new year and is a time for family reunions, feasting, and traditional customs. The holiday usually lasts until the Lantern Festival, held on the 15th day of the lunar calendar. This year, the Spring Festival officially starts on January 29, 2025.