China's PP Market: Weak Trend on August 5
Domestic Petrochemical Inventories: Polyolefin inventories of oil and petroleum products reached 805,000 tons, down 15,000 tons from yesterday.
Futures Analysis: The PP2509 contract's night trading price on August 5th fluctuated within a narrow range. The morning session continued the night trading pattern, with the fluctuation range narrowing further. The afternoon session saw a sustained upward trend. Opening price for the PP2509 contract was 1,671 lots.
The opening price was 7,049, the high was 7,104, the low was 7,047, with a spread of 57. Opening volume was 258,551 lots. The settlement price was 7,066. Yesterday's settlement price was 7,069, a decrease of 3. Daily trading volume was 162,173 lots. Deposited funds were 1.284 billion yuan, with an outflow of 4.47 million yuan.
Mainstream Market Quotes for Wire Drawing:
Domestic Spot Market Analysis: Today, the domestic PP market showed a trend of two declines and three stability. Market prices in North China and South China have dropped slightly, while market prices in East China, Southwest China, and Northwest China have remained stable. In terms of price: the mainstream price of domestic polypropylene ranges from 6,960 to 7,200 yuan per ton.
In the PP production link, the factory's ex-factory pricing system has generally remained stable, with only a few companies making slight downward adjustments to prices based on their own inventory adjustments or regional competition strategies. From the perspective of the circulation link, market transaction prices in some regions have fallen slightly.
In the downstream link, most industries have entered the traditional production off-season, and the operating rate of enterprises has dropped significantly compared to the peak season. Taking the plastic weaving industry as an example, affected by the shrinking demand for terminal packaging, the operating rate of most small and medium-sized plastic weaving factories has remained at only 41.10%. In the PP non-woven fabric field, some companies have adopted phased shutdown measures to avoid inventory risks.
The overall operating rate of the industry is less than 50%, which can only meet the order needs of core customers. This low operating rate has directly led to a weakening of downstream demand for PP raw materials, leading to more cautious inventory replenishment, further exacerbating pressure on the market demand side and a lack of upward price momentum. A slight decline in regional market prices is within expectations.
The current market transaction atmosphere remains subdued, with downstream companies' purchasing behavior still centered on rigid demand. Restocking is strictly aligned with production and consumption, and there has been no active expansion of inventory. This underlying weakness in demand continues to suppress the market, making it difficult for any potential boost to be effectively released, resulting in a relatively flat overall market performance.
Market Forecast: On August 4th, rainfall restricted production at some open-pit coal mines in Ordos, resulting in a marginal tightening of output. While some mines may resume production after the rain subsides, the impact of the previous production squeeze remains, and the increase in external procurement prices by major coal companies will support market prices. There are no changes to on-site PP production capacity, and the start-up dates for some units remain uncertain.
Market factors are intertwined. In the international crude oil market, the continued US sanctions on oil-producing countries are positive, but OPEC+'s production increases, easing geopolitical tensions, and a weak global economy are negative.
In particular, OPEC+'s potential for a significant production increase in September, coupled with the expected lack of significant supply disruptions from US sanctions on Russia, are weighing on the market, in turn impacting polypropylene costs.
Against this backdrop, domestic polypropylene prices in US dollars have seen some narrow adjustments, while domestic prices remain weak. End-user demand remains subdued due to the macroeconomic environment and its own demand structure.
Traders are making slight price adjustments to facilitate transactions, and firm prices are subject to negotiation based on market conditions. However, the overall spot market remains weak, with low trading volume, reflecting the weak supply and demand conditions. Overall, the polypropylene market is likely to continue its weak and volatile pattern in the short term.
Domestic PP Index: According to Tuduoduo data, the domestic PP spot index was 7053.00 on August 5, down 2%, or 0.03%.
Guoneng auction statistics: Guoneng Coal Chemical's auction volume today was 2,020 tons, up 5.54% from yesterday; the transaction volume was 1,356 tons, up 130.61% from yesterday; the transaction rate was 67.13%, up 36.41% from yesterday.
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