August 18: China PP Market Weak

Domestic Petrochemical Inventories: Polyolefin inventories of both crude and crude oil products reached 825,000 tons, an increase of 60,000 tons from the previous week.

Futures Analysis: The PP2601 contract's night trading price on August 18th showed a narrow range of fluctuations. The volatile trend continued after the morning opening, with the price center of gravity gradually shifting downward.

The price fluctuated downward in the afternoon, reaching the intraday low before rebounding, but remained weak. Opening positions for the PP2601 contract increased by 28,369 lots. The opening price was 7,073, the high was 7,081, the low was 7,032, with a spread of 49.

Open interest was 391,726, and the settlement price was 7,058. Yesterday's settlement price was 7,083, a decrease of 25. Daily trading volume was 198,514 lots, with deposited funds of 1.933 billion yuan and inflows of 131 million yuan.

Mainstream Market Quotes for Wire Drawing:

Domestic Spot Market Analysis: Today's domestic PP market showed a weak trend. Market prices in North China, East China, South China, Southwest China, and Northwest China have all declined to varying degrees, ranging from 10 to 50 yuan/ton.

Regarding prices, the mainstream domestic polypropylene price ranges from 6,930 to 7,150 yuan/ton. Ex-factory prices at PP manufacturers remain generally stable, with only a few companies reducing their prices by 30 yuan/ton. Downstream industries, affected by the off-season, have seen low operating rates at end-product manufacturers, resulting in significant year-on-year and month-on-month order shortages.

Stocking is primarily for small, urgent orders, resulting in a slowdown in overall purchasing activity and lackluster enthusiasm. In this context, the market lacks substantial positive drivers, leading to continued volatility in spot prices and cautious trading sentiment.

Market Forecast: The current polypropylene market is characterized by a mix of bullish and bearish factors. On the positive side, the continued US sanctions on oil-producing countries have created uncertainty in crude oil supply, providing some support for costs.

However, the market also faces numerous negative factors. The easing of geopolitical tensions compared to the previous period has reduced the risk of crude oil supply disruptions. OPEC+ has maintained its production increase, increasing global crude oil supply and thus weakening the cost support for polypropylene. Furthermore, the sluggish global economy and weak overall market demand have also dampened polypropylene market performance. 

On the supply side, Quanzhou Guoheng's 450,000 ton/year plant is scheduled to restart today, adding to the expected supply. Meanwhile, polyolefin inventories at the two major oil companies reached 825,000 tons over the weekend, putting significant downward pressure on current market prices.

Some prices in the US dollar market have fallen, and domestic spot prices have also been under pressure and are consolidating. Buyers are showing little interest in bidding and are offering low prices, while sellers are facing high holding costs. However, due to the overall sluggish trading atmosphere, traders have lowered their offers to facilitate transactions, leaving some room for concessions in actual order negotiations. 

Overall, the polypropylene market lacks clear drivers for growth in the short term. Against the backdrop of increasing supply, high inventories, and weak demand, market prices are expected to remain weak and volatile. Without significant positive news, prices are unlikely to rebound significantly.

Domestic PP Index: According to Tuduoduo data, the domestic PP spot index was 7023.00 on August 18, down 19 points, or 0.27%.

GuoNeng Auction Statistics: GuoNeng Coal Chemical's auction volume today was 3033 tons, a decrease of 20.18% from yesterday; 1327 tons were sold, a decrease of 24.43% from yesterday, with a sell-through rate of 43.75%, a decrease of 2.46% from yesterday.

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