PP Market Weak Volatility Dec 3
Domestic petrochemical inventory: Sinopec and PetroChina's polyolefin inventory is 700,000 tons, a decrease of 35,000 tons from yesterday.
Futures Analysis: On December 3rd, the PP2601 contract price fluctuated downwards in the night session, maintaining a narrow range. The price center shifted further downwards in the morning session, and the price fluctuated within a range in the afternoon session. Although there were some rebounds, the price never broke through the level before the morning decline.
The 01 contract saw a decrease of 9,112 lots in open interest. Opening price: 6410, highest price: 6417, lowest price: 6361, price difference: 56, open interest: 459,901, settlement price: 6386, previous settlement: 6407, decrease: 21, daily trading volume: 228,079 lots, idle funds: 2.055 billion, capital outflow: 49.9 million.
Mainstream market prices for PP (rough grade):
Domestic spot market analysis: Today, the domestic PP market showed an overall weak trend. Market prices in North and Southwest China remained stable, while prices in East, South, and Northwest China declined, with reductions ranging from 20-30 yuan/ton.
Domestic mainstream polypropylene prices ranged from 6150-6450 yuan/ton. The current PP market exhibits a stable-to-adjustment pattern under a weak supply-demand balance. Upstream producers maintained stable ex-factory prices to preserve market order, with only a few companies slightly lowering their quotes by 20-100 yuan/ton due to regional supply-demand differences or inventory digestion needs.
This did not significantly change the overall cost support for the market. Demand was weak, with downstream industries such as plastic weaving and packaging showing no substantial improvement in orders.
Overall demand remained at a moderate level. Coupled with a cautious market sentiment regarding future trends, end-user companies' restocking activities were strictly limited to immediate needs, with no proactive inventory increases, thus having a limited impact on spot prices.
Affected by a lack of positive fundamentals in supply and demand and weak market sentiment, PP futures prices have trended downwards with fluctuations. The linkage between futures and spot prices has further impacted the spot market, leading traders to adopt a market-driven trading strategy, flexibly adjusting prices to facilitate transactions.
Overall, under the combined influence of relatively stable supply, insufficient demand support, and a weak futures market, the current PP market price is exhibiting a weak consolidation pattern, with a generally mild trading atmosphere and no significant one-sided price movements.
Market Outlook: The current PP market is in a tug-of-war between bullish and bearish factors. The positive factors mainly rely on the continuation of US sanctions against oil-producing countries, coupled with energy price volatility caused by geopolitical uncertainties, providing a temporary floor for PP costs.
However, the bearish pressure is more prominent. OPEC+'s continued stance of increasing production has led to ample crude oil supply, and the weak global economic recovery is dragging down end-user demand, directly impacting the upstream and downstream of the PP industry chain.
On the supply side, PP plants are operating stably with no significant maintenance or production reduction plans, resulting in continued ample spot supply. The accelerated rate of inventory reduction further exacerbates supply-side pressure. Downstream industries showed divergent performance. Purchases in essential sectors like woven plastic bags and packaging were primarily driven by immediate demand, with companies largely adopting a buy-on-dips strategy and showing little willingness to actively increase inventory.
Industries such as home appliances and automotive modification saw limited order growth due to weak end-consumer demand, resulting in relatively restrained purchasing of PP raw materials. Cooler temperatures further suppressed demand, with slower outdoor construction in northern regions leading to a decline in demand for products like woven plastic bags. The operating rates of some downstream companies temporarily decreased, further weakening market absorption capacity.
Coupled with the shift in sentiment from rising to falling futures prices, traders adjusted their quotations accordingly, leading to a strong wait-and-see atmosphere in the market. Overall, the core contradiction of supply and demand imbalance in the PP market is unlikely to ease quickly in the short term. Cost-side support is limited, and the weak demand situation is unlikely to improve substantially. It is expected that the polypropylene market will maintain a weak and volatile pattern in the short term.
Domestic PP Index: According to data from TuDuoDuo, the domestic PP spot index was 6277.00 on December 3rd, down 9 points, a decrease of 0.14%.
Guoneng's auction statistics: Guoneng Coal Chemical's auction volume today was 1,683 tons, down 1% from yesterday; 1,281 tons were sold, down 20.19% from yesterday, with a transaction rate of 76.11%, down 18.30% from yesterday.
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