PP Market Weakens Ahead of Spring Festival
Domestic petrochemical inventory: Sinopec and PetroChina's polyolefin inventory reached 600,000 tons, an increase of 155,000 tons from last week.
Futures Analysis: On February 2nd, the PP2605 contract price briefly dipped in the night session before rebounding. In the morning session, prices quickly plunged after opening and remained weak, continuing the downward trend in the afternoon. The May contract saw a decrease of 20,289 lots in open interest. Opening price: 6857, highest price: 6896, lowest price: 6669, spread: 227, open interest: 509,663, settlement price: 6774, previous settlement price: 6855, decrease: 81, daily trading volume: 634,599 lots, idle funds: 2.395 billion, outflow: 136 million.
Mainstream PP Ratio Prices:
Domestic Spot Market Analysis: Today, the domestic PP market showed an overall weak consolidation trend. Prices in the Southwest region saw increases, ranging from 50-100 yuan/ton. Prices in North China, East China, South China, and Northwest China fell compared to last Friday, with adjustments ranging from 20-50 yuan/ton. Domestic polypropylene mainstream prices ranged from 6380-6880 yuan/ton.
Currently, the domestic PP market remains generally stable, with producers primarily maintaining stable prices. Only a few companies flexibly adjusted prices based on their own production and sales schedules, with price increases concentrated between 50-150 yuan/ton and decreases between 10-100 yuan/ton. Directly affected by the weakening futures market, spot market prices in some regions shifted slightly downwards, and the overall market lacked strong support.
From the perspective of market supply and demand and transactions, downstream industry demand was weak, with insufficient end-user purchasing activity. Speculative activity in the market cooled significantly, further suppressing market trading activity, and the overall negotiation atmosphere was weak.
Traders are flexibly adjusting their pricing strategies in line with market conditions, primarily relying on market rates and negotiating deals based on actual orders. The market as a whole is characterized by a supply-demand balance and sluggish trading, with all sectors operating cautiously.
Market Forecast: With the Spring Festival approaching, the domestic polypropylene market is significantly slowing down due to a combination of bullish and bearish factors and the holiday effect. Internationally, the battle between bullish and bearish forces intensifies.
On the positive side, OPEC+'s suspension of production increases continues to support crude oil costs, and the continuation of US sanctions against oil-producing countries, coupled with ongoing geopolitical disturbances, provides some cost support for the energy and chemical industry chain. On the negative side, the slow global economic recovery, generally weak end-user demand, and the Federal Reserve's slow pace of interest rate cuts have resulted in insufficient funding support for the commodity market, suppressing overall market sentiment.
As the Spring Festival approaches, downstream manufacturing orders are largely completed, and pre-holiday factors such as logistics shutdowns and workers returning home are gradually taking effect. Most industries are entering a holiday period, with only essential sectors maintaining production to ensure basic needs and supplies. To mitigate the risk of supply chain disruptions after the holiday, factories initiated moderate pre-holiday restocking.
Oil and gas inventories accumulated to 155,000 tons over the weekend, but the industry's proactive destocking process continues into the year-end. Market acceptance of high-priced goods remains low, and high-price transactions continue to be hampered, with actual transactions concentrated on immediate needs.
In the short term, the polypropylene market will enter a pre-holiday period of weak supply and demand. Cost support and seasonal negative factors will offset each other, making a clear market trend unlikely. The market is likely to fluctuate narrowly and remain stable, with trading activity remaining subdued.
Domestic PP Index: According to data from TuDuoDuo, the domestic PP spot index was 6662.00 on February 2nd, down 9 points, a decrease of 0.13%.
Guoneng Auction Statistics: Guoneng Coal Chemical's auction volume today was 1200 tons, an increase of 194.12% compared to yesterday; 949 tons were sold, an increase of 132.6% compared to yesterday, with a transaction rate of 79.08%, a decrease of 20.92% compared to yesterday.
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