China PP holds onto war gains, but cracks emerge as import and export prices slip below $1200/ton

China’s PP market has managed to retain most of the gains accumulated during the Middle East conflict-driven rally, outperforming both PE and PVC markets where post-war corrections have become more pronounced. However, the first signs of a broader adjustment are emerging as both import and export prices have slipped below the key $1200/ton threshold.

While domestic prices continue to draw support from tightening supply conditions, weakening overseas demand, recovering Middle Eastern availability, and growing pressure on import offers suggest that the war-driven uptrend is gradually losing momentum.

Import homo-PP raffia breaks below $1200 mark

China’s import PP market had been the most resilient segment following the March rally. However, recent price declines indicate that the prolonged period of stability may be ending. Aside from a modest correction in the PPBC injection segment during late May, import prices generally followed a stable-to-firm trend from late December 2025 through early June, according to ChemOrbis Price Index data.

At the height of the conflict-driven surge, import PP prices jumped by roughly 50% as fears of Middle Eastern supply disruptions fueled aggressive buying activity. As the market gradually absorbed these bullish factors, panic-driven sentiment faded and weak underlying demand resurfaced, preventing any further upside. Consequently, prices largely moved sideways with only limited adjustments from early April onward.

Availability from the Middle East has gradually improved, while downstream demand remains weak. Meanwhile, softer export offers from China and intensifying competition among overseas suppliers have added pressure to the market. As of early this week, homo-PP raffia import offers were reported at around $1170/ton CIF China, cash, falling below the psychological $1200/ton threshold.

Despite the recent declines, import PP prices remain exceptionally elevated, with homo-PP raffia and injection grades hovering near 11-year highs. Current import levels are still around 50% above their last pre-war levels.

Domestic supply constraints counter seasonal demand weakness

Unlike the import market, domestic PP prices have remained relatively resilient thanks to tightening local supply conditions.

After the sharp increases recorded in March, local prices entered a period of fluctuation before regaining upward momentum in the latest week. According to ChemOrbis data, domestic prices currently remain around 43-45% above their pre-war levels.

The firmness in the local market has been driven primarily by supply-side factors rather than any meaningful improvement in demand fundamentals. Market participants continue to anticipate reduced availability as maintenance shutdowns become increasingly concentrated. According to market sources, a growing number of producers have either suspended operations or maintained reduced operating rates to limit losses associated with elevated production costs.

Supply-side pressures have become particularly evident during the second quarter. According to ChemOrbis Supply Wizard, a large number of domestic PP plants have undergone maintenance turnarounds, with June alone accounting for more than 1.1 million tons of offline PP capacity. The substantial volume of shutdowns has tightened spot availability and strengthened sellers’ pricing power.

A trader remarked, “Ongoing maintenance shutdowns and lower operating rates are tightening supply and supporting prices.” Meanwhile, stronger PP futures and firmer crude oil prices have also provided additional support to market sentiment.

Another factor supporting the domestic market is the gradual normalization of its relationship with imports. According to ChemOrbis Price Index data, local PP prices traded at unusually large discounts to imported material throughout much of March-May despite offering prompt availability. As import prices surged during the conflict-driven rally, domestic values lagged behind, making local cargoes comparatively more attractive for buyers. Market participants now report that domestic prices are gradually recovering part of this lost premium as supply tightens and import prices begin to soften.

Nevertheless, demand remains the market’s weakest link. Downstream industries are entering the traditional off-season, resulting in slower operating rates and fewer new orders. Buyers have largely restricted purchases to immediate production requirements, while overall transaction activity remains subdued. As a result, the current firmness in domestic prices continues to rely heavily on supply constraints rather than consumption-driven support.

Weak overseas demand weighs on export performance

Fresh homo-PP raffia offers were reported at around $1170/ton FOB China this week, extending last week’s decline and pushing export prices below the key $1200/ton mark. Even so, current export levels remain roughly 44% above those recorded before the US-Iran conflict erupted.

Export prices have come under increasing pressure over the past two weeks as buying interest from Southeast Asia weakened noticeably. Players report fewer export orders and limited buying interest from overseas customers, while the competitive landscape has become increasingly challenging amid expectations of recovering Middle Eastern supply.

A Zhejiang-based trader noted, “During the war, production disruptions among major Middle Eastern suppliers and logistics hurdles temporarily tightened supply. However, inventories that were previously unable to move accumulated at ports and are expected to re-enter the market following the ceasefire.”

He added, “At the same time, production in Southeast Asia has gradually resumed, with regional suppliers lowering prices to defend market share. This has reduced the attractiveness of Chinese cargoes and weakened demand from one of China’s key export destinations.”

Despite these headwinds, firm domestic prices have limited exporters’ room to cut offers aggressively, while the yuan’s appreciation to around four-year highs against the US dollar and major trading-partner currencies has also raised the cost of Chinese PP outflows. These factors have helped slow the pace of declines, although export sentiment remains vulnerable as competition intensifies, and overseas demand continues to disappoint.