The domestic PP market in the first half of 2023 experienced a volatile downward trend, deviating from the predictions in our “2022-2023 China PP Market Annual Report.” This was mainly due to the combination of strong expectations meeting weak realities and the impact of increased production capacity. Starting in March, PP entered a declining channel, and the lack of demand momentum, coupled with weakened cost support, accelerated the downward trend in May and June, reaching a historic low in three years. Taking the example of PP filament prices in the East China market, the highest price occurred at the end of January at 8,025 yuan/ton, and the lowest price occurred at the beginning of June at 7,035 yuan/ton. In terms of average prices, the average price of PP filament in East China in the first half of 2023 was 7,522 yuan/ton, a decrease of 12.71% compared to the same period last year. As of June 30, the domestic PP filament price stood at 7,125 yuan/ton, a decrease of 7.83% from the beginning of the year.
Looking at the trend of PP, the market reached its peak in late January in the first half of the year. On one hand, this was due to the strong expectation of recovery after policy optimization for epidemic control, and the continuous rise of PP futures boosted market sentiment for spot trading. On the other hand, the accumulation of inventory in oil tanks after the long Chinese New Year holiday was slower than expected, supporting post-holiday price increases due to enhanced production costs. However, as strong demand expectations fell short and the European and American banking crisis led to a significant decline in crude oil prices, PP prices were affected and adjusted downward. It is reported that downstream factories’ economic efficiency and production enthusiasm were affected by fewer orders and accumulated product inventory, leading to consecutive reductions in operating loads. In April, the operating loads of downstream plastic weaving, injection molding, and BOPP industries reached a five-year low compared to the same period.
Although PP plants underwent maintenance in May, and enterprise inventories remained at a medium to low level, the lack of substantial positive support in the market could not overcome the continuous weakening of demand during the off-season, resulting in a continuous decline in PP prices until early June. Subsequently, driven by reduced spot supply and favorable futures performance, PP prices rebounded temporarily. However, the sluggish downstream demand limited the upside of price rebound, and in June, the market saw a game between supply and demand, resulting in volatile PP prices.
In terms of product types, copolymers performed better than filaments, with a significant widening of the price difference between the two. In April, the reduced production of low-melt copolymers by upstream companies led to a significant decrease in spot supply, tightening the supply and effectively supporting copolymer prices, which showed an upward trend diverging from the filament trend, resulting in a price difference of 450-500 yuan/ton between the two. In May and June, with the improvement in copolymer production and the unfavorable outlook for new orders in the automotive and home appliance industries, copolymers lacked fundamental support and experienced a downward trend, although at a slower pace than filaments. The price difference between the two remained between 400-500 yuan/ton. In late June, as the pressure on copolymer supply increased, the downward speed accelerated, resulting in the lowest price of the first half of the year.
Taking the example of low-melt copolymer prices in the East China market, the highest price occurred at the end of January at 8,250 yuan/ton, and the lowest price occurred at the end of June at 7,370 yuan/ton. In terms of average prices, the average price of copolymers in the first half of 2023 was 7,814 yuan/ton, a decrease of 9.67% compared to the same period last year. As of June 30, the domestic PP copolymer price stood at 7,410 yuan/ton, a decrease of 7.26% from the beginning of the year.
Post time: Aug-03-2023