China PP Holds Firm, But Signs of Weakness Begin to Surface

China’s polypropylene (PP) market has largely preserved the gains achieved during the Middle East conflict-driven rally, showing stronger resilience than PE and PVC markets, which have already seen sharper corrections. However, recent developments indicate that the upward momentum is gradually fading as both import and export prices have dropped below the important $1200/ton level.

Import Prices Slip Below Key Threshold

China's import PP market remained relatively stable after the strong rally seen earlier this year. However, softer buying activity and improving product availability have recently started to pressure prices.

Import homo-PP raffia offers were reported around $1170/ton CIF China this week, falling below the $1200/ton mark. Although prices have eased, they still remain significantly higher than levels seen before the Middle East conflict, reflecting the substantial gains accumulated during the rally.

The market is facing increasing pressure from improving Middle Eastern supply, weaker downstream demand, and growing competition among international suppliers.

Domestic Market Supported by Tight Supply

Unlike imports, China's domestic PP market continues to receive support from supply-side constraints.

A large number of production units are undergoing maintenance, while some producers have reduced operating rates due to cost pressures. These factors have tightened spot availability and helped keep local prices firm despite weak consumption.

More than one million tons of PP capacity is estimated to be offline during June, limiting supply and strengthening sellers' position in the domestic market.

Higher crude oil prices and stronger PP futures have also provided additional support to market sentiment.

Demand Remains a Key Concern

Despite supply tightness, downstream demand remains sluggish. Many manufacturing sectors are entering the seasonal low-demand period, resulting in slower operating rates and fewer new orders.

Most buyers continue purchasing only according to immediate production requirements, while overall trading activity remains cautious. As a result, domestic price strength is being driven mainly by restricted supply rather than stronger consumption.

Export Market Faces Growing Challenges

China's export PP market has also come under pressure, with homo-PP raffia offers reported near $1170/ton FOB China.

Demand from Southeast Asia has weakened, while regional suppliers have become increasingly competitive. Improved production levels in neighboring markets and the expected return of Middle Eastern volumes have intensified competition for export business.

In addition, the stronger Chinese yuan has reduced the competitiveness of Chinese exports, making it more difficult for suppliers to attract overseas buyers.

Outlook

China’s PP market remains stronger than many other polymer markets, supported by maintenance shutdowns and tighter domestic supply. However, falling import and export prices, weaker overseas demand, and improving global availability suggest that the market may be entering a gradual correction phase.

While supply constraints continue to support local prices, demand remains the biggest challenge for sustaining current levels in the coming weeks.

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