PP Spot Prices Drop on Rising Supply Pressure

Domestic petrochemical inventory: The inventory of polyolefins of two oils is 865,000 tons, down 25,000 tons from yesterday.

Futures analysis: On June 4, PP2509 opened at 6876, the highest price was 6953, the lowest price was 6876, the position was 513164, the settlement price was 6911, yesterday's settlement was 6889, the increase was 22, the daily trading volume was 296705 lots, the deposited funds were 2.496 billion, and the capital outflow was 23.85 million.

Market mainstream quotes for wire drawing:

Domestic spot market analysis: Today, the domestic PP market as a whole showed a downward trend. Except for the stable market prices in North China and the rising market prices in East China, the market prices in other regions fell, ranging from 10 to 30 yuan/ton. In terms of price: the mainstream price of domestic polypropylene ranged from 6960 to 7240 yuan/ton.

The increasing instability of the geopolitical situation, coupled with the sudden wildfires in Canada's crude oil producing areas, supports the continued rise in international oil prices. The cost side provides certain positive support for the PP market. However, some PP units in the market have been restarted, and the accumulation of inventory has increased supply pressure. 

In addition, downstream demand is weak, and purchases are mainly based on rigid demand, and the market price is insufficient to rise.

Analysis of the domestic futures market: The night market price of the PP2509 contract fluctuated upward; it weakened after the opening of the morning market; the price rose to the intraday high of 6953 in the afternoon and then consolidated in a narrow range.

As of today's afternoon closing, the PP2509 contract fluctuated between 6876 and 6953 throughout the day, with a spread of 77.09 contracts reduced positions by 9721 lots, and the current position is 513164 lots.

Forecast for the future market: In terms of raw materials, the crude oil market may be affected by the weakening of the US tariff policy pressure, the instability of the geopolitical situation, the US summer travel peak season and other favorable factors, as well as the negative factors such as OPEC+ maintaining its position of increasing production and weak global crude oil demand.

It is also necessary to pay attention to the impact of related changes on international oil prices. On the supply side, the impact of the shutdown of PP units has dropped significantly.

As some of the previously shut down PP units gradually resume operation and the new production plans are implemented, it is expected that the supply recovery volume in the market may gradually increase, and the supply side support is limited.

On the demand side, downstream consumption is in the off-season, and most of them maintain the state of rigid demand replenishment, and the improvement prospects in the short term are difficult to be positive. Overall, it is expected that the polypropylene market may fluctuate downward in the short term.

Domestic PP Index: According to Tu Duoduo data, the domestic PP spot index on June 4 was 7073.00, down 2, a range of 0.03%.

Guoneng auction statistics: Guoneng Coal Chemical's auction volume today was 1,897 tons, down 12.98% from yesterday; the transaction volume was 1,699 tons, up 1.37% from yesterday, and the transaction rate was 89.56%, up 12.68% from yesterday.

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