PP: Weakness persists amid lackluster supply and demand

After PP spot prices hit a new annual low in early November, the market entered a delicate balance from mid-month. Spot offers have stabilized with limited overall movement. As of Nov 18, mainstream offers for homo PP raffia grade in North China are at 6280-6400yuan/mt, while East China reports prices of 6,360-6,500 yuan/mt.

Overall, as macro factors gradually exert less influence on the market, the main driving logic has shifted to supply and demand fundamentals. Against the backdrop of ample supply in the PP market, industry participants lack confidence and largely maintain a bearish outlook. Specifically:

On the supply side, with the commissioning of PP plants of PetroChina Guangxi II, 2025 PP market capacity expansion basically comes to an end. Barring unexpected developments, no further capacity expansions are expected in November-December, alleviating expansion pressure. However, given the total capacity base now exceeding 48 million tons/year, actual supply pressure remains significant. Recent PP plant maintenance shutdowns have increased, partially easing supply pressure, particularly in South China. In the later period, more plants are expected to shut for turnaround, and PP plant operating rate may drop below 80%. Additionally, unplanned maintenance warrants monitoring.

On the demand side, the concentrated procurement period of early-stage e-commerce activities has passed. Demand in packaging sectors like CPP and plastic weaving has slowed, entering a seasonal lull with declining operating rates. End-users predominantly make essential purchases, adopting a hand-to-mouth approach. Moreover, global economic weakness has dampened export orders for downstream products, leaving finished goods inventories persistently high.

Against the backdrop of ample market supply, insufficient downstream new orders remain the core issue. Although the short-term market have been supported by the increased plant turnarounds, it's inadequate to fundamentally offset the vast industry capacity base. Resolving supply-demand imbalances will require time, and the weak trend is unlikely to reverse abruptly. Without significant positive catalysts, further price declines cannot be ruled out.