PP supply disrupted by increasing unexpected plant shutdowns

After an intensive maintenance period lasting four months (from April to July), most of the annual maintenance plans for polypropylene have been completed, with the next round of scheduled turnaround primarily focused in October. From April to July, the production loss due to plant maintenance has exceeded 700kt each month, with July's production loss reaching approximately 759.4kt, setting a new monthly record. During this period, in addition to the planned maintenance, temporary shutdowns also contributed significantly. However, in terms of total production, despite the record-high maintenance losses, actual production has increased rather than decreased, thanks to the expanded capacity base.

In August, there are not many planned maintenance activities, so supply is expected to continue to increase compared to July. However, there have been frequent unexpected shutdowns recently, causing domestic PP operating rates to drop below 80%. Although some of the temporarily closed plants only experienced downtime of 3 to 7 days, the delayed return to production undoubtedly provides the market, where demand has not yet improved, with more time to adapt.

The production proportion of homo PP raffia and low-MFR co PP have remained relatively stable and have not shown significant changes due to plant maintenances or restarts. However, it can be seen that the proportion of homo PP raffia is currently below the average level. In contrast, the proportion of low-MFR co PP is now above the average level.

The switch of production and the effects of the off-season, have accelerated the narrowing of the price spread between low-MFR co PP and homo PP raffia, decreasing from 400-450yuan/mt at the beginning of July to the current 200-250yuan/mt. Moreover, the low-end prices of low-MFR co PP are now almost on par with the high-end prices of homo PP raffia. Looking ahead, if there are no significant changes in the production proportion of homo PP raffia and low-MFR co PP, the price spread between the two may continue to narrow.