The Polypropylene Market is Likely to Observe Short-Term Gains

New Delhi, India: The hovering uncertainty over the Polypropylene market across the regions has tremendously concerned the major producers. According to the statistics, most plants that declared a turnaround or force majeure in China during the last month are Polypropylene facilities. The curtailment of such significant volumes, coupled with the rebound of the market activities in the European region, somewhat strengthens sentiment amongst the market participants that Polypropylene prices may perform better for the short term in several markets.

In China, Sinopec Yangzi (80,000 MT/year), Bora Lyondellbasell Petrochemical (400,000 MT/year), Oriental Energy (400,000 MT/year), PetroChina Liaoyang (30,000 MT/year), Shenhua Xinjiang Energy (450,000 MT/year), CSPC (400,000 MT/year) has declared maintenance turnaround in August with no information about the time extension. At the same time, several facilities ended their turnaround in August, including Sinopec Shanghai PC (450,000 MT/year), Hebei Haiwei Group (300,000 MT/year), Zhong Tian He Chuang Energy Company (350,000 MT/year), Sinopec Maoming Petrochemical (200,000 MT/year), North Huajin Chemical (50,000 MT/year). Cumulatively, an overall capacity of 410,000 MT/year is offline currently, pressuring the overall domestic supply capabilities and providing a significant opportunity for the overseas supplier to cater to the domestic demand by actively participating. 

The Shanghai Commodity Exchange data showcased that the import of Polypropylene prices extended their losses and fell to a 2-years low. The overall demand remains slow despite the forthcoming start of the peak seasonality. In response, the Southeast Asian market participants are looking for directions as they are stuck between rising Crude Oil prices and a weakened demand outlook.

According to the ChemAnalyst pricing intelligence, China has rapidly expanded its Polypropylene facilities in the past several years, reducing its dependence on overseas markets. Although the current shift in the market dynamics and the ongoing economic woes in China coupled with inadequate performance in the real-estate sector, the demand has not improved in the domestic market as anticipated by the market participants. At the same time, market players restocked Polypropylene inventories against the insufficient demand, which imbalanced the overall market outlook for Polypropylene in China. Now, as the significant capacities are on a turnaround, the anticipated surge in demand from the domestic and overseas markets may improve the enthusiasm amongst the producers to raise the prices for Polypropylene.