China PP prices rangebound amid balanced supply-demand & new capacity pressure

Key Highlights

• Prices Dip Marginally: Wire-drawing PP declined 1.18% MoM due to weak demand and stable upstream costs.
• Steady Production, High Inventories: Output averaged 750,000 tons/week; inventories declined but remain elevated.
• Demand Enters Off-Season: Plastic weaving and agri-construction sectors saw reduced uptake post-festival stocking.
• New Capacity Looms: A 1.4 million ton addition expected next quarter may further soften market fundamentals.

Chinese PP Market Price: Mild Downtrend Amid Consolidation

• The Chinese domestic Polypropylene (PP) market continued in a consolidation phase throughout May 2025. The market witnessed a marginal downward trend in prices:
• As of June 1, the mainstream quoted price for wire drawing grade PP stood at around USD 1,030/ton, registering a decline of -1.18% compared to early May levels.
• Fluctuations in upstream raw material prices and cautious downstream buying sentiment contributed to this modest drop.
• Spot prices remained under pressure due to a generally well-supplied market and muted demand during the off-season.
• In Delhi's PP market, prices vary across different grades, with Reliance SRM100NC commanding the highest rate at ₹1,09,000/MT for random copolymer grades, followed by Haldia M312 at ₹1,04,000/MT and IOCL 3120MA at ₹1,03,000/MT. 
• For PPHP Raffia grades, Marlex HGX030SP is priced at ₹97,000/MT, while in the PPHP Injection Moulding segment, MRPL HM012T is available at ₹95,000/MT and OPAL MH13 at ₹94,500/MT.

Stable Production and Inventory Pressures Dominate Supply Outlook

Supply Side:

• Domestic PP producers operated at relatively stable load levels through May, with overall plant operating rates averaging 77%, up by 1% from late April.
• Weekly PP output hovered around 750,000 tons, reflecting a steady production pace. 
• Outages from plants like Sinopec Tianjin, Ningbo Formosa, and Jinneng Chemical were offset by restarts at Lanzhou Petrochemical and others, keeping the supply stable. 
• Domestic inventories declined slightly, dipping below 820,000 tons, but still remained elevated — maintaining pressure on the spot market. 
• Crucially, a new production capacity of 1.4 million tons is expected to be operational in the upcoming quarter, signaling further supply loosening in the near term.

Demand Side:

• Demand weakened in May as the market entered its seasonal off-peak.
• The plastic weaving and construction/agricultural sectors experienced lower material consumption following brief pre-festival stocking. 
• A short-lived demand uptick followed early May’s Sino-US tariff suspension talks but cooled off toward the end of the month. 
• Export prospects for downstream PP products improved marginally, yet order fulfillment and shipment cycles indicate that benefits will be delayed. 
• Buyers showed a preference for small-volume, need-based purchases, avoiding long-term stocking amid high inventories and uncertain macroeconomic signals.

Key Market News & Developments: Seasonal Demand Slowdown

• The Sino-US tariff situation remained a key market mover. Although positive sentiment stemmed from temporary tariff suspensions, the overall uncertainty continues to cloud outlook.
• Crude oil markets rebounded mid-May on easing trade tensions and geopolitical risks in the Middle East and Eastern Europe, supporting upstream cost dynamics to some extent.
• Domestic propane trade is expected to gradually decouple, potentially reducing PDH producers’ cost pressures, though impact on PP remains limited for now.
• Raw material markets such as propylene saw fluctuating prices due to average digestion speed and moderate inventory drawdowns, providing neutral cost support to PP.
• The domestic macroeconomic environment, while showing resilience, has already absorbed recent policy stimulus, causing the market to refocus on real-time demand-supply fundamentals.

Expert Opinion:  Capacity Expansion and Trade Dynamics

Looking ahead to early June, the PP market is expected to remain rangebound, continuing its consolidation trend. Key factors to watch include the implementation of new PP production capacities, inventory clearance pace, and the evolving global trade and crude oil landscape.