China PP markets stage cautious recovery as futures, oil and pre-holiday buying lend support

China’s PP markets are showing early signs of a cautious recovery in mid-January, with prices moving higher across most segments after months of sustained weakness. Firmer upstream costs, a steady rally in Dalian PP futures, and rising crude oil prices have lifted market sentiment, while gradual pre-holiday restocking ahead of the Lunar New Year has encouraged more active buying interest.

The recent upturn comes after China’s PP markets closed 2025 at exceptionally low levels, with several benchmarks hitting multi-year, and in some cases record, troughs. Although the recovery remains fragile, January has so far marked the first period of broad-based upward price movement since late October.

Prices rebound from historic or pandemic-era lows

At the end of 2025, FOB China homo-PP raffia and injection prices averaged $775/ton, the lowest level since the ChemOrbis Price Index was launched in early 2021. CIF China homo-PP raffia and injection stood at $770/ton, the weakest since April 2020, while CIF China PP block copolymer (PPBC) injection sank to $795/ton, a level last seen in November 2008. Domestically, ex-warehouse prices fell to CNY6200/ton for homo-PP and CNY6400/ton for PPBC, with the latter marking an all-time low.

After little movement at the start of 2026, local homo-PP prices posted a modest increase last week, the first since late October. This week, the recovery broadened, with market sources reporting local gains of CNY100-150/ton, import prices up by around $10/ton, and FOB China offers rising by as much as $15/ton.

Futures, crude oil, and propylene underpin sentiment

The latest price gains were widely attributed to strength in futures and energy markets. May PP futures on the Dalian Commodity Exchange have risen consistently since late December, settling at CNY6576/ton ($836/ton without VAT) on Wednesday, January 14, up from around CNY6290/ton at the end of December. Market participants pointed to the sustained upward trend as a key driver behind spot price increases.

“Local prices rose sharply compared with last week due to higher futures and rising crude oil prices,” a trader said.

Crude oil markets have also provided support. March Brent crude rose to $65.47/bbl on January 13, up around 8% from a week earlier, as heightened geopolitical risks continued to underpin prices. Concerns over potential disruptions to Iranian exports and risks to crude flows in the Black Sea have kept energy markets firm, feeding through to polymer costs.

Upstream costs were further supported by propylene, with CFR China spot propylene climbing to $770/ton, a three-month high, adding additional cost pressure for PP producers.

Pre-holiday restocking lifts activity, but demand remains selective

With the Lunar New Year holiday set to begin on February 17 this year, downstream buyers have gradually become more active, particularly amid expectations that prices could remain firm in the near term. Several traders reported increased inquiries and improved deal volumes, largely driven by inventory replenishment rather than a structural recovery in end-use demand.

“There are more buyers willing to call for offers, and they are purchasing more for inventory replenishment,” a Shanghai-based trader said, adding that sentiment had improved and he was optimistic about the market outlook in January. Another Chinese trader noted that futures gains and pre-holiday restocking had supported prices, saying that December and January were arguably the best-performing months of the past year.

From the supply side, availability remains ample overall, although planned maintenance has offered some temporary relief. A Zhejiang-based trader noted that spot supply has slowed due to turnarounds, while downstream operating rates remain normal. “With rising prices, downstream willingness to restock has increased,” the trader said, while warning that inventory pressure could still trigger a sharp pullback if prices rise too quickly.

Imports and exports see mixed signals

Import prices have edged higher in line with the local market, though gains remain modest amid still-lengthy supply. Some traders said imported material had become less attractive compared with domestic products as price arbitrage narrowed.

Export prices also strengthened, supported by higher local prices and yuan appreciation. However, overseas demand remains weak. “Export prices rose due to currency appreciation and higher local levels, but export demand is still soft,” a trader said, cautioning that the stronger yuan could limit competitiveness.