Polypropylene (PP): Upside potential is limited!
Domestic petrochemical inventory: The combined inventory of Sinopec and PetroChina's polyolefins was 660,000 tons, unchanged from yesterday.
Futures Analysis: On July 7th, the PP2609 contract price initially dipped slightly before stabilizing, then began a sustained upward trend. The morning session saw a pattern of rising and then pulling back, followed by a second surge. The afternoon session saw a concentrated upward move, and even with a slight pullback at the close, prices remained within a high range.
The September contract saw an increase of 53,008 lots in open interest. Open price: 7271, highest price: 7466, lowest price: 7261, price difference: 205, open interest: 556,387, settlement price: 7380, previous settlement price: 7297, increase: 83, daily trading volume: 738,081 lots, idle funds: 2.903 billion, capital inflow: 340 million.
Mainstream PP Ratio Prices:
Domestic Spot Market Analysis: Today, the domestic PP market showed an overall strong trend. Market prices in North China, East China, South China, Southwest China, and Northwest China all rose compared to yesterday, with increases ranging from 50 to 100 yuan/ton. Domestic polypropylene mainstream prices ranged from 7620 to 8160 yuan/ton. Currently, major PP manufacturers' ex-factory prices are generally stable, with significant differences in price adjustments among manufacturers.
Some manufacturers raised prices by 30-150 yuan/ton, while many others lowered prices by 50-400 yuan/ton. Boosted by the strengthening futures market, traders generally maintained stable prices with slight increases, flexibly adapting to market fluctuations in their daily operations, with specific transactions finalized through individual negotiations. While downstream procurement showed a slight increase, the overall market turnover did not expand significantly.
The rising futures prices created a certain upward price atmosphere, with many traders taking advantage of the situation to lock in profits; however, actual spot trading was lackluster, and overall market activity was flat. End-users are primarily purchasing only for immediate needs, with weak overall downstream demand and limited capacity to absorb demand. Constrained by this fundamental situation, spot market quotations have become more conservative and cautious, resulting in a generally flat market.
Market Outlook: The current polypropylene market exhibits a mixed picture of bullish and bearish factors, with prices generally under pressure and fluctuating, lacking both upward and downward momentum. Market support mainly relies on overseas geopolitical situations. The Middle East conflict has not yet reached a complete ceasefire consensus, and regional uncertainties persist.
Furthermore, the slow recovery of production capacity in major Middle Eastern oil-producing countries provides some supply support from crude oil, indirectly lowering PP market costs. However, overall bearish factors are more prominent, significantly suppressing prices. As tensions between the US and Iran gradually ease, navigation in the Strait of Hormuz steadily resumes, and OPEC oil-producing countries actively implement production increase measures, concerns about crude oil supply risks continue to dissipate, and cost benefits have largely faded.
Simultaneously, rising expectations of a Fed rate hike, coupled with continued weakness in the overall downstream consumer market, further drag down overall market sentiment. On the spot market, downstream industry profit margins have slightly recovered, and some traders have engaged in temporary restocking.
However, the market as a whole remains driven by immediate needs, with end-user purchasing activity remaining generally weak. Considering all factors, the PP market is unlikely to experience a one-sided trend in the short term. With geopolitical advantages offsetting supply, demand, and macroeconomic headwinds, the market is expected to continue its narrow range-bound trading with limited overall volatility.
Domestic PP Index: According to data from TuDuoDuo, the domestic PP spot index was 7900.00 on July 7th, up 65, or 0.83%.
Guoneng Auction Statistics: Guoneng Coal Chemical's auction volume today was 1246 tons, up 16.89% from yesterday; 1246 tons were sold, up 16.89% from yesterday, with a 100% sales rate, remaining stable compared to yesterday.
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