Supply Contraction and Steady PP Demand Stabilize Prices Amid Maintenance Shutdowns Summary

Key Highlights

• Stable Prices: Most polymer prices, including LLDPE, HDPE, and PP grades, remained steady with minor fluctuations.
• Supply Tightness: Production cuts by major domestic enterprises led to reduced inventory, falling by 20,000 tons to 680,000 tons.
• Seasonal Demand Weakness: Consumption for woven bags and pipes declined, while BOPP film demand remained robust.
• Outlook: Prices likely to remain stable, with potential for slight increases driven by continued supply constraints and cautious demand recovery.

Polymer Prices: Overview of Key Price Levels

• Low K (DG700): Rs. 78.75/kg (Ex Nhava Sheva/Mundra)
• Low K (B57): Rs. 83.50/kg (Ex Nhava Sheva/Mundra)
• LG LS100H: Rs. 76.50/kg (Ex Mundra/Bhiwandi)
• LLDPE: Rs. 86.50/kg (Ex Mundra/Bhiwandi)
• LDPE: Rs. 116/kg (Ex Mundra/Bhiwandi)
• HDPE PE100 Natural: Rs. 88/kg (Ex Mundra/Bhiwandi)
• HDPE PE100 Black: Rs. 90/kg (Ex Mundra/Bhiwandi)
• HDPE HM: Rs. 90/kg (Ex Mundra/Bhiwandi)
• HD Blow Molding: Rs. 91/kg (Ex Mundra/Bhiwandi)
• PP Raffia: Rs. 90/kg (Ex Godown)
• PP Film: Rs. 99.50/kg (Ex Godown)
• PPCP: Rs. 98/kg (Ex Godown)
• PP Lamination: Rs. 100/kg (Ex Godown)

Supply and Demand: Impact of Operational Cuts and Seasonal Demand Variations

• In late November, the domestic polypropylene (PP) market saw a significant contraction in supply due to reduced production levels at several domestic enterprises. Notable producers like Zhejiang Petrochemical, Guangzhou Petrochemical, Donghua Energy, and CNOOC Shell undertook planned maintenance, lowering the industry’s operational load from 75% at the beginning of the month to below 68%.

• Additional load reduction at Hebei Haiwei and Lianhong Xinke further tightened the supply. As a result, PP shipments contracted significantly, with inventory levels falling by 20,000 tons to 680,000 tons. While supply remains ample, structural constraints have supported spot prices.

• On the demand side, the market remained stable but showed signs of weakness due to seasonality. Demand for woven bags used in industries such as fertilizers and cement declined slightly. Earlier gains in pipe consumption, spurred by real estate policy stimulus, began to wane. However, BOPP film consumption remained strong, and raw material reserves at terminal enterprises were stable with some increases. Overall, demand remained weak but steady with minimal fluctuations.

Market News: HDPE and PP International Price Movements

• HDPE Film Grade HD7000 (U.S.): Quoted at US$ 905/MT, T/T, CFR Main China Port basis for January 2025 arrival.
• PP Fiber (Saudi Arabia): Quoted at US$ 920/MT, L/C at sight, CFR Huangpu basis for bonded warehouse.
• PP Injection Grade 5705P (Saudi Arabia): Quoted at US$ 890/MT, T/T, CFR Huangpu basis for December 2024 shipment.
• Vynova Shutdown: Vynova plans to shut its ethylene-based VCM plant in Wilhelmshaven, Germany, for three weeks of maintenance at the end of November 2024.

Expert Opinion on Price Stability and Potential Upward Trends

• PP prices are expected to remain stable with potential slight increases, driven by continued supply-side maintenance and cautious demand. Market participants should keep a close eye on supply disruptions and evolving demand trends, which are likely to influence price movements in the near term.