PP market during the Chinese New Year holiday

On the first working day after the Chinese New Year holiday, despite the lack of futures guidance, the macro environment was relatively stable, and bulk commodities performed well. International crude oil prices continued to rise (WTI crude oil futures for March increased from $73.86/bbl to $79.19/bbl, Brent crude oil futures for April increased from $79.21/bbl to $83.47/bbl). In addition, the U.S. January CPI and PPI were both higher than market expectations. These factors have improved the PP market sentiment, and traders have tested the market with higher offers. Homo PP raffia and low-MFR co PP have seen price increases of 50-100yuan/mt, achieving a good start to the year. However, due to slow resumption of work in downstream factories, the overall market transaction is limited.

1. Inventory:

During the Chinese New Year holiday, both inventory in coal chemical and private petrochemical plants and inventory in Sinopec and PetroChina increased compared to the same period in previous years, which is closely related to the continuous rapid expansion of PP production capacity in China in recent years, with the capacity growth rate of Sinopec and PetroChina systems reaching 16% in 2023.

2. Operating Rates:

During the Chinese New Year holiday, Sinopec Maoming PC PP plant #2 shut for maintenance, while PP plant of Grand Resource (Juzhenyuan) I #1, Qingdao Jineng Technology I, PetroChina Liaoyang PC #2 and Shaoxing Sanyuan #1 restarted. Most other plants maintained normal production, leading to a slight increase in PP operating rates.

3. Subsequent concerns:

1) Recovery of downstream demand and market transactions.

2) Progress of new startups.

3) Changes in inventory levels.