PP Market Analysis: Weak Demand
Domestic petrochemical inventory: The polyolefin inventory of Sinopec and PetroChina was 560,000 tons, unchanged from yesterday.
Futures Analysis: On January 20th, the PP2605 contract price dipped slightly in the night session, then stabilized and rebounded. The price continued to decline in the morning session, forming a "V"-shaped reversal. The afternoon session saw narrow-range fluctuations.
The 05 contract saw a decrease of 4,192 lots in open interest. Opening price: 6488, highest price: 6490, lowest price: 6429, price difference: 61, open interest: 466,302, settlement price: 6458, previous settlement: 6508, decrease: 50, daily trading volume: 293,559 lots, idle funds: 2.109 billion, capital outflow: 25.88 million.
Mainstream market prices for PP (rough grade):
Domestic spot market analysis: Today, the domestic PP market showed an overall weak trend. Prices in South China remained stable, while prices in North China, East China, Southwest China, and Northwest China all declined, with reductions ranging from 20 to 50 yuan/ton. Domestic mainstream polypropylene prices ranged from 6170 to 6630 yuan/ton.
Currently, most PP producers are maintaining stable ex-factory prices, with only a few adjusting their quotations flexibly based on their own production and sales schedules and inventory levels. Price increases were concentrated between 50 and 150 yuan/ton, while decreases ranged from 10 to 20 yuan/ton. Downstream demand remained weak, with end-users primarily purchasing only as needed and lacking the willingness to replenish inventory in bulk. Overall market trading was sluggish, with transaction activity remaining low.
Futures prices showed a fluctuating downward trend, providing insufficient support to the spot market and driving spot prices to continue their weak performance. Traders, influenced by market conditions, have adopted a cautious approach, often offering discounts to expedite the flow of goods.
Actual transactions are primarily based on negotiations between buyers and sellers. Under the overall supply-demand dynamic, the market remains weak, and trading activity has not shown significant improvement.
Market Outlook: The current polypropylene market is characterized by a significant interplay of bullish and bearish factors. On the positive side, the continued suspension of OPEC+ production increases, the continuation of US sanctions against some oil-producing countries, and ongoing geopolitical uncertainties provide some support for costs.
On the negative side, the market is dragged down by a slowdown in global economic recovery, overall weak end-user demand, and the Federal Reserve's slow pace of interest rate cuts, all of which suppress sentiment in the commodity market.
Downstream mainstream industries such as plastic weaving and injection molding continue their on-demand purchasing pace. The previous macroeconomic benefits have gradually faded, and the follow-up efforts in the end-market have not substantially improved.
Most companies are in the final stages of year-end order closing, with weak new order intake and low willingness to stock up. Furthermore, with the Spring Festival holiday approaching, downstream companies are planning to shut down for the holidays, coupled with an urgent need to recover funds, making a pre-holiday concentrated restocking unlikely. Weak demand is the core constraint on the current market.
The current supply and demand fundamentals have not improved significantly. PetroChina and Sinopec inventories remained unchanged from yesterday, with no significant pressure released on the supply side. Meanwhile, the seasonal contraction in demand is becoming increasingly apparent.
Under this supply-demand imbalance, the market lacks upward momentum. It is expected that the polypropylene market will maintain a weak, range-bound trend in the short term. Cost support can only slow the decline, not reverse the weak trend.
Domestic PP Index: According to data from TuDuoDuo, the domestic PP spot index was 6404.00 on January 20th, down 17, a decrease of 0.26%.
Guoneng's auction statistics: Guoneng Coal Chemical's auction volume today was 1,456 tons, a decrease of 6.49% compared to yesterday; the transaction volume was 1,367 tons, a decrease of 3.32% compared to yesterday, with a transaction rate of 93.89%, an increase of 3.07% compared to yesterday.
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