PP market review in the second quarter

1. Market Review

In the second quarter of 2024, the overall PP granule market showed an upward trend. In April, PP market was range bound, with prices fluctuating around 150yuan/mt within the month, and there was a noticeable phenomenon of lackluster performance during the peak season. In May, downstream entered the slack season, and several plants had started commercial production during the month. However, with the support of plant maintenance and macroeconomic factors, PP futures significantly moved up in the second half of the month, driving up spot prices with an increase of 250yuan/mt within the month. In June, as PP futures prices sharply declined at the beginning of the month, PP market once again entered a phase of consolidation with fluctuations of less than 100yuan/mt within the month.

Compared to the performance of the same period in 2023, it can be said that the market trends are significantly different.

2. New Production Capacity

In the second quarter, China PP granule production capacity increased by 2.1 million tons/year to 41.685 million tons/year, primarily concentrated in May and most of them are PDH-based PP plants. Geographically, the new capacity is mainly in the North China and South China regions. In terms of operational stability, both Phase II of Qingdao Jineng Technology II and Quanzhou Grand Pacific Chemical are currently in a shutdown state.

Regarding regional production capacity, as of the second quarter of 2024, PP granule production capacity in South China reached 9.79 million tons/year, leaping from the third-place position in the region in 2023 to the top position.

3. Production loss due to maintenance

In the second quarter of 2024, there was a significant increase in production losses due to plant maintenance compared to the same period in 2023, with losses generally exceeding 25%. In June, the increase was close to 35%, closely tied to the continuously expanding production base.

4. Downstream BOPP Profits

BOPP, as a highly standardized downstream product of PP, has shown unsatisfactory performance in recent years. Industry profits have been decreasing year by year, with the second quarter of 2024 approaching breakeven line. This trend, to some extent, reflects the lackluster demand in the downstream sector of PP.