China PP Extends Decline as Falling Crude and Rising Supply Weigh on Market

China’s polypropylene (PP) market remained under pressure this week, with prices falling further as the conflict-driven premium built up during recent Middle East tensions continued to fade. The sharp decline in crude oil prices following the easing of regional supply concerns has weakened cost support across the petrochemical chain, while sluggish demand and improving supply availability have added to the bearish sentiment.

Although prices have corrected significantly in recent weeks, PP values are still estimated to remain around 30-45% above pre-conflict levels, indicating that part of the earlier geopolitical premium remains embedded in the market.

Physical and Futures Markets Move Lower

PP prices across China recorded notable declines during the opening days of the week. Domestic offers fell by as much as CNY900/ton ($133/ton), while import prices were reduced by $20-90/ton, depending on grade and origin. Export offers also weakened, with transaction levels reported to be approximately $60/ton lower than previous levels.

The decline was largely driven by weaker crude oil prices after shipping routes through the Strait of Hormuz resumed normal operations, easing concerns over potential supply disruptions. Brent crude remained around $77-78/bbl, increasing downward pressure on the broader petrochemical market.

At the same time, CFR China propylene prices continued their prolonged decline, extending a soft trend that has persisted for several weeks.

Futures markets reflected the same weakness. PP futures on the Dalian Commodity Exchange posted significant losses during the first two trading sessions of the week, resulting in a cumulative decline of CNY569/ton ($84/ton) by June 23.

Supply Conditions Continue to Improve

Beyond lower feedstock costs, growing supply availability has become another major factor weighing on the market.

Industry participants reported that domestic PP supply is gradually increasing as production units return from maintenance shutdowns and several delayed projects move closer to start-up. As a result, the market is shifting away from the tighter conditions seen earlier this year toward a more balanced supply environment.

The increase in available material is reducing concerns over shortages and adding further pressure on sellers to remain competitive.

Seasonal Demand Remains Weak

Demand conditions continue to disappoint despite recent price reductions. Market participants reported that downstream orders remain significantly below normal levels, with some major producers seeing order volumes fall by around 40%.

Export demand has also softened as overseas buyers delay purchases in anticipation of further price declines. Many customers continue to view current PP prices as relatively high despite the recent correction, encouraging a wait-and-see approach.

Some regions have seen limited bargain buying as lower prices attract interest from processors looking to secure immediate requirements. However, most buyers remain cautious and continue to purchase only essential volumes amid the seasonal slowdown.

Market Outlook Remains Cautious

The combination of lower crude oil prices, weakening feedstock markets, improving supply availability, and subdued demand continues to create a challenging environment for China’s PP market.

While occasional buying interest may emerge at lower price levels, market participants generally expect pressure to persist as supply grows and buyers remain reluctant to build inventories. Unless demand improves significantly, the ongoing unwinding of the conflict-related premium could lead to additional corrections in the weeks ahead.

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