China PP Market Stagnant Amid Off-Season Demand and High Inventory

Key Highlights

• Indian PP prices steady across key regions with no major fluctuations in raffia and injection grades.
• China market weak due to seasonal demand slowdown and excess availability from new production lines.
• Feedstock costs falling as crude and propane prices dip; propylene prices also declining in China.
• Outlook bearish with high inventories, limited export activity, and no signs of demand recovery yet.

Price Trends: Domestic Price Trends – India

• In the domestic Indian market, Reliance’s SRM100NC is priced at ₹100,000/MT in Delhi, while Haldia’s M312 and IOCL’s 3120MA are quoted at ₹104,000/MT and ₹105,000/MT respectively in the same region. 
• For PPHP grades, Marlex’s HGX030SP (raffia type) is listed at ₹94,500/MT in Chennai and ₹95,000/MT in Ahmedabad. 
• HMEL’s M12RR (injection molding) is available at ₹100,000/MT in Mundra and ₹97,250/MT in Bhiwandi. 
• TQ Film grade HF010 from MRPL is listed at ₹100,000/MT in Mundra and Bhiwandi. Lamination grade HY035R is available at ₹101,000/MT in Rajkot and ₹102,000/MT in Hyderabad.
• The Chinese domestic polypropylene (PP) market witnessed weak fluctuations during the first half of July. As of July 15th, the mainstream offer price for wire drawing grade PP stood at USD 1,025/ton, marking a 1.23% decrease from the beginning of the month. This decline reflects subdued cost support and softening demand.

Demand and Supply Dynamics

1. Supply Side: Domestic producers in China carried out concentrated maintenance activities in early July. However, this was largely offset by the ramp-up of newly added production lines such as Zhenhai Line 4 and Yulong Line 4, contributing to an additional 1.4 million tons of capacity. 

   Operating rates slightly declined from 77% to 76%, while weekly average output remained stable at around 770,000 tons. Inventory levels were recorded at 790,000 tons, indicating ample availability.

2. Demand Side: The market is currently in the traditional off-season for PP consumption. End-use sectors such as plastic weaving, construction, and agriculture displayed sluggish activity. 

   Downstream producers are running at reduced capacities, relying on on-demand procurement. Export activity and bulk stocking are limited, and overall liquidity remains weak with scattered small-volume orders dominating the market.

Market News: Planned Maintenance & Plant Operations

• Crude oil prices came under pressure amid a cooling geopolitical environment in the Middle East and OPEC+’s indication of a willingness to increase supply. Propane followed suit, softening further due to weak consumption. Consequently, PDH-based PP producers faced reduced cost support.
• Propylene prices witnessed a downward trend in China on Wednesday, while remaining steady in the South Korean market.
• CFR China propylene prices were assessed at USD 760-770/MT, reflecting a drop of USD 10/MT from the previous day. An industry insider attributed the price dip to weakening regional buying momentum.
• FOB Korea propylene prices held firm, assessed unchanged at USD 735-745/MT compared to Tuesday’s levels.
• While facilities such as Jingbo, Dalian Petrochemical, and Tianjin Bohai reduced output or extended maintenance, increased production from players like Zhejiang Petrochemical and Quanzhou Guoheng offset supply disruptions, keeping total market output steady.
• Shenhua Xinjiang Mining Co is expected to shut down its polypropylene (PP) unit by the end of July 2025 for planned maintenance. The unit, located in Xinjiang, China, has a production capacity of 450,000 MT/year and will likely remain offline for approximately 45 days.

Market Expectation and Short-Term Market Outlook

• The PP market is expected to remain sluggish in the short term. The combination of:
  1. Lower feedstock support
  2. High inventory levels,Weak seasonal demand
  3. Bearish market sentiment is likely to cap any upward price movement. 
• Unless there is a significant improvement in downstream consumption or a disruption in supply, spot prices are projected to hover at low levels through the remainder of July.