PP Market Analysis (January 14)
Domestic petrochemical inventory: Sinopec and PetroChina's polyolefin inventory was 560,000 tons, a decrease of 30,000 tons from yesterday.
Futures Analysis: On January 14th, the PP2605 contract price fluctuated and weakened in the night session, with a slight rebound at the end of the night session. The price continued its weakness in the morning session, then bottomed out and rebounded, maintaining a high level of fluctuation in the afternoon session. The 05 contract saw a decrease of 9,082 lots in open interest. Open price: 6563, highest price: 6607, lowest price: 6545, price difference: 62, open interest: 484,356, settlement price: 6576, previous settlement price: 6540, increase: 36, daily trading volume: 424,090 lots, idle funds: 2.234 billion, capital outflow: 26.35 million.
Mainstream market prices for PP (rough grade):
Domestic spot market analysis: Today, the domestic PP market continued its slightly stronger consolidation trend. Market prices in North China, East China, South China, Southwest China, and Northwest China all saw varying degrees of increase compared to yesterday, with price increases ranging from 50 to 100 yuan/ton. Domestic polypropylene mainstream prices range from 6180 to 6680 yuan/ton. Currently, the PP market is driven by rising futures prices, with spot market prices continuing their upward trend.
The operational rhythm of different links in the industry chain is showing differentiated characteristics. Specifically, PP producers' ex-factory prices are diverging; some grades remain stable, while others have adjusted prices for different grades, with clear adjustment ranges: increases ranging from 20 to 140 yuan/ton and decreases ranging from 20 to 130 yuan/ton. Boosted by futures market performance, traders are closely following spot market price trends and adjusting their quotations. Actual transactions are mostly based on negotiation, with flexible bargaining space.
Although overall downstream market demand is currently weak, and there has been no concentrated restocking, market trading atmosphere is still acceptable, with essential purchases supporting smooth spot market circulation. Overall, the upward trend in futures prices has effectively transmitted to the spot market, driving prices higher and influencing traders' operational strategies. Meanwhile, differentiated pricing by producers is adapting to the current supply and demand dynamics. These multiple factors combined have driven the PP market to its current state.
Market Outlook: The current polypropylene market is characterized by a complex interplay of bullish and bearish factors. Cost support and weak demand are sharply contrasting, resulting in a phased market movement.
On the positive side, the continuation of OPEC+'s policy to suspend production increases, coupled with the continued US sanctions against oil-producing countries and ongoing geopolitical instability, has supported the crude oil market, thus strengthening polypropylene costs. On the negative side, the slowdown in global economic recovery has led to overall weak end-user demand, and the Federal Reserve's slow pace of interest rate cuts further suppresses market demand. From a fundamental perspective, the end of the year marks the traditional off-season for consumption.
Downstream enterprises have limited new order growth and most are maintaining a cautious, just-in-time purchasing strategy. Coupled with factories planning to shut down for holidays as the Spring Festival approaches, the willingness to stock up is unlikely to increase significantly. The demand-side pull on the market remains weak. While there has been marginal improvement on the supply side, with oil and gas inventories decreasing by 30,000 tons compared to yesterday, alleviating supply pressure to some extent, current spot resources remain ample, and the loose supply-demand situation has not fundamentally changed.
In summary, while cost support can provide some floor for prices, weak demand is the core constraint at present, and downstream operating rates are likely to decline further before the holiday. It is expected that the polypropylene market will maintain a fluctuating consolidation trend in the short term.
Domestic PP Index: According to data from TuDuoDuo, the domestic PP spot index was 6452.00 on January 14th, up 60, or 0.94%.
Guoneng's auction statistics: Guoneng Coal Chemical's auction volume today was 1,316 tons, a decrease of 0.90% compared to yesterday; the transaction volume was 1,316 tons, a decrease of 0.53% compared to yesterday, with a transaction rate of 100%, an increase of 0.38% compared to yesterday.
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