Homo-PP markets edge higher in China; but sustainability in doubt

China’s homo-PP raffia and inj. markets have seen modest price gains, supported by earlier strength in crude oil and Dalian futures during Middle Eastern tensions. However, demand has remained subdued, with most buyers limiting purchases to basic needs amid the seasonal lull. Although inventories at major producers have shown some drawdowns, supply remains ample. The market’s weak fundamentals, coupled with a sharp reversal in crude oil prices, are now casting doubt on the sustainability of the recent gains.

Slight price hikes seen across the board

So far this week, sellers have implemented moderate price hikes. A source from a Shenzhen-based producer commented, “PP prices have climbed due to stronger crude oil futures, which increased feedstock costs. High oil prices also briefly lifted downstream buying enthusiasm.”

Local prices rose by CNY100/ton ($14/ton) on the low end, while import prices increased by $10/ton, marking the first gain in five weeks. Export offers also climbed by $5-20/ton, hitting the highest levels since late May, according to data from ChemOrbis Price Index.

But further hikes under question

However, the combination of a plunge in crude oil prices, muted demand, and lingering oversupply has cast a shadow over the market’s upward momentum.

Reflecting these challenges, a major Saudi Arabian producer trimmed its July homo-PP raffia offers to China by $10/ton from June, bringing them to $880/ton CIF, cash. The move highlights the growing difficulty sellers are facing in sustaining price hikes under current conditions.

Weak fundamentals still weigh on market

Demand has yet to show a meaningful recovery. Despite slightly improved sentiment, most buyers continue to make only need-based purchases. A Ningbo-based trader noted, “Local and export demand are both weak. The domestic market is struggling with a fragile economy, while the export side faces yuan appreciation and a murky outlook.” The Shenzhen producer’s source added, “Oversupply remains a major burden. Even though buying interest has picked up slightly, higher prices are still met with resistance. Export activities have also been dampened by high shipping costs.”

Caught between export headwinds—including weak global demand, a strengthening yuan, and high freight costs—and a domestic supply surplus, it remains uncertain whether Chinese PP exporters can sustain the momentum needed to extend China’s three-month streak as a net PP exporter.

ChemOrbis’ Supply Wizard reveals that China’s PP market remains structurally oversupplied. By the end of June, Shandong Yulong Petrochemical and Zhenhai Refining & Chemical are set to bring two new PP units online, adding a combined capacity of 900,000 tons/year. While upcoming maintenance shutdowns may offset part of the surplus, the overall supply landscape is still heavy.

Cost rally weakens as crude tumbles

Previously, market sentiment was buoyed by concerns over Middle East tensions and oil prices. But the ceasefire between Iran and Israel has triggered a sharp drop in energy markets, with Brent crude falling by around 13% in just two sessions. This has shifted sentiment, especially as the recent PP gains were largely cost-driven and lacked support from stronger fundamentals.

A source from another local producer warned, “The recent price increases were purely driven by cost and rely heavily on crude’s direction.” With oil markets weakening, the current uptrend in China’s PP market looks increasingly fragile.