China Homo-PP Prices Reach 12-Year Highs, PPBC Maintains 8-Year Peak

China’s domestic polypropylene market continued its four-month upward trend, with weekly price assessments reaching fresh multi-year highs. Strong Dalian futures, widespread plant maintenance, production cuts, elevated crude oil and propylene prices, and limited import availability continued to provide support.

However, weak downstream demand remains a major challenge. Rising prices have increasingly discouraged buyers from making fresh purchases. Although the market began the week of November 2 with a firm pricing outlook, Monday’s sharp decline in crude oil prices weakened confidence and raised questions about the rally’s sustainability.

Domestic PP Gains Accelerate Amid Supply and Cost Support

China’s domestic PP market regained momentum in the week ending October 30 after remaining stable the previous week. Prices across grades increased by CNY200–450/ton. According to the ChemOrbis Price Index, weekly average prices for homo-PP raffia and injection reached their highest levels in nearly 12 years, while PPBC injection prices remained around an eight-year peak.

The market has generally maintained a stable-to-firmer trend since early July, with only two weeks of slight price corrections during the four-month period.

Strong Futures and Upstream Costs Reinforce Market Sentiment

Dalian futures provided significant support during the previous week. By October 29, January PP futures on the Dalian Commodity Exchange had climbed CNY1,033/ton ($155/ton) from the previous Thursday, when weekly ChemOrbis assessments were finalized.

Upstream markets also strengthened the bullish outlook. Brent crude futures traded around $115/bbl, while CFR China spot propylene extended its gains for a fourth consecutive week, reaching its highest level since ChemOrbis began tracking the market in January 2018.

Spot propylene has also followed a largely stable-to-firm trend since early July, interrupted by only two softer weekly adjustments in late September.

Maintenance and Lower Production Restrict Supply

Domestic availability remained constrained by extensive maintenance shutdowns and production reductions. Combined polyolefin inventories held by CNPC and Sinopec fell below 700,000 tons on October 29, decreasing by 45,000 tons daily and 30,000 tons over the week.

Import availability also remained limited, with fewer overseas offers reaching China. A trader dealing in Saudi Arabian cargoes said some suppliers had suspended Chinese quotations after allocating more volumes to Southeast Asia, where better pricing opportunities were available. This shift in export allocation further supported domestic prices.

Domestic PP Market Starts November on a Firm Note

Early market indications for the week beginning November 2 suggest that China’s domestic PP market is maintaining its upward momentum. Market participants continue to point to reduced operating rates, concentrated maintenance activity, firm Dalian futures and high upstream costs as key supporting factors.

Following the October 29 assessments, Dalian PP futures added a combined CNY262/ton ($39/ton) across Friday and Monday’s final two settlements. Spot propylene also remained near its record high, continuing to support sellers’ cost positions.

Tight spot supply is sustaining firm offers despite concerns about inventory developments. Market participants remain reluctant to turn bearish, although the scope for further increases is becoming less certain.

Factors That Could Weaken the Bullish Trend

Crude Oil Prices Retreat Sharply

Brent futures closed above $117/bbl on Friday after a substantial daily gain. However, the benchmark retreated to around $108/bbl during Monday’s intraday trading at the time of reporting.

The decline followed negotiations in Qatar concerning the reopening of the Strait of Hormuz. Uncertainty over the Middle East conflict remained, as no agreement had been reached between the parties. Statements from US President Donald Trump ahead of the midterm elections also added to market uncertainty.

Polyolefin Inventories Increase

Inventories held by China’s two major producers rose by a significant 100,000 tons over the weekend, raising concerns about production discipline. Nevertheless, spot PP availability remains tight, meaning immediate supply-side support has not yet disappeared.

Weak Downstream Demand Remains the Main Concern

Demand continues to pose the greatest challenge to the market’s prolonged rally. Downstream manufacturers are facing shrinking margins, with some reducing operating rates rather than accepting higher feedstock costs.

Traders said price increases have not triggered meaningful replenishment. Buyers continue to focus on immediate requirements and are prioritizing production cuts over inventory accumulation.

One market participant expects PP prices to stabilize in the near term unless upstream prices resume their upward movement or downstream purchasing improves. Another trader described buyers as highly cautious.

With futures and upstream costs still supporting prices but end-user demand remaining weak, China’s PP market is increasingly caught between firm supply and cost fundamentals and growing resistance from price-sensitive buyers.

Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.