PP Market at Inflection Point: China Futures Slide, RIL Hike Signals Sentiment Reset Amid Tight Indian Supply

Key Highlights

1. China PP raffia futures fell to ~CNY 5,850/MT, reflecting severe oversupply and weak demand.
2. RIL raised domestic PP prices by ₹500/MT from 15 December, despite soft global cues.
3. Indian PP inventories remain lean, with imports disrupted by year-end holidays.
4. Spot premiums of ₹1–2/kg may emerge if inventory tightness persists.

PP Market Pricing: China PP Weakness Contrasts with India’s Strategic Price Hike

• PP pricing dynamics remain mixed. In China, PP raffia futures on the Dalian Exchange have fallen sharply to around CNY 5,850/MT (~USD 740/MT)—levels even lower than those witnessed during the COVID period. 
• Spot deals are being concluded at additional discounts to futures, underscoring deep bearishness in the regional market.
• In contrast, the Indian domestic market saw a marginal upward revision, with Reliance Industries Ltd (RIL) increasing PP prices by ₹500/MT (≈50 paise/kg) effective 15 December 2025, while deemed prices were rolled over. 
• Given the absence of supportive global cues—soft international benchmarks, muted feedstock trends, and fragile regional demand—the hike appears strategic rather than cost-driven, aimed at sentiment management amid tightening domestic availability.

Demand & Supply: Cautious Buying Meets Lean Inventories in Indian PP Market

• Demand conditions remain cautious across Asia. Most PP buyers have already completed routine stocking and are currently operating on hand-to-mouth procurement, restricting purchases to immediate requirements to avoid inventory devaluation. This conservative buying behavior continues to cap near-term upside.
• On the supply side in India, channel checks indicate lean inventory positions across producers, co-producers, and processors. Additionally, the import pipeline remains thin, partly due to year-end and New Year holiday disruptions, which has reduced spot availability. 
• While underlying consumption is not robust, the tightness in inventories limits the downside risk and provides room for sentiment-led price firmness.

Market News: RIL Price Revision and INR Weakness Shape Near-Term Sentiment

• RIL revised domestic PP prices upward by ₹500/MT across sectors, effective 15 December 2025.
• The INR weakened to 90.79 against the USD, adding cost pressure to imports and supporting domestic price defensiveness.
• India’s broader macro backdrop turned supportive, with November 2025 merchandise exports rising nearly 20% YoY to USD 38.13 billion, aided by strong shipments to China and the US despite elevated tariffs. 
• Petroleum products, pharmaceuticals, electronics, and engineering goods led the recovery, reinforcing confidence in industrial offtake resilience.

Market Expectation: Inventory Tightness May Support Spot Premiums Despite Weak Cues

• Near-term sentiment for PP and LLDPE remains soft, with participants closely tracking movements in Dalian futures and crude oil trends for directional cues. However, if domestic inventory tightness persists, the recent price hike could act as a sentiment trigger, potentially lifting spot bazaar premiums by ₹1–2/kg over company prices in the short term.
• Processors are advised to secure volumes against currently available lower-priced inventories, as the window may narrow if availability tightens further and sentiment stabilizes. Overall, while fundamentals are not overtly bullish yet, the market appears to be entering a transition phase, where small price actions could generate outsized ripple effects.