China’s import homo-PP prices soften from around 8-month highs

China witnessed import homo-PP raffia and inj. prices posting first decreases in two months as of the week ending on March 21. While some suppliers maintained their offers, citing tight supply from the Middle East, others opted to make slight adjustments of $10/ton due to falling costs and dwindling demand. Therefore, the overall import range was assessed stable to $10/ton lower in a weekly comparison, pulling the weekly average level down from its nearly eight-month high.

Despite the recent drops, import prices for homo-PP raffia and inj. continued to carry premiums over locals, according to data from ChemOrbis Price Index. This highlighted the pain points in China’s domestic market, which remained under significant pressure of weak supply-demand dynamics.

Market faces weaker costs, sluggish demand

A Zhejiang-based trader opined, “The previous decline in oil prices has significantly eased cost support.” Indeed, crude futures remained on a weak footing, while the propylene market retained its five-week downtrend amid bearish sentiment stemming from a supply glut and weak upstream feedstocks. ChemOrbis Price Wizard suggests that spot propylene prices stood at their three-and-a-half-month lows of $835/ton as of March 21, dampening cost support for PP prices.

Additionally, demand remained in the doldrums, despite some seasonal upticks. Offtake volumes were still tied to immediate needs with limited transactions. “Factory operations are increasing, but buyers still replace the inventories they consume, refraining from building additional stocks,” commented another trader. Meanwhile, a source noted, “Prices are lower due to reduced production costs. Demand is stagnant amid low buying enthusiasm from downstream sectors, resulting in unideal numbers of deals.”

Import prices keep carrying premium over locals

Inside China, the trading atmosphere remained subdued amid the lack of positive impact from macroeconomic policies, while concerns over oversupply continued to linger. Although maintenance turnarounds provided some relief, the expected increase in production cast a cloud over the domestic PP market.

“An inventory buildup persists in March. With large-scale capacity expansions, some plants are keeping operating rates low to alleviate supply pressure from new startups. The recent rebound in crude oil futures may provide some relief in the short term, but the long-term market will face intense oversupply,” said another local trader.

According to ChemOrbis Production News Pro, ExxonMobil (Huizhou) PC planned to bring two PP plants, with a combined capacity of 850,000 tons/year, into operation by the end of this month. However, this is just one piece of a larger picture, as massive capacities of 3.55 million tons/year are set to come online throughout the rest of the year.

During the week ending on March 15, domestic prices for homo-PP raffia and inj. posted fresh decreases of CNY50-200/ton ($7-28/ton), with the weekly midpoint reaching its lowest level since H2 of July 2023, as per ChemOrbis data. The data also reveal that local prices continued to trade below imports with a notable discount of $29/ton—the highest difference in nearly four years. The competitive prices for domestic materials, indeed, present an additional challenge for import sellers.