China PP Rebounds as Higher Costs and Tight Supply Outweigh Weak Demand

China’s polypropylene (PP) market has shifted back into an upward trend after several weeks of price corrections, with import, domestic, and export prices all moving higher. The latest recovery has been driven mainly by rising feedstock costs and limited spot supply rather than any significant improvement in downstream demand, delaying the market’s return to pre-conflict price levels.

The rebound follows a sharp increase in crude oil, propylene, and PP futures, fueled by renewed geopolitical tensions in the Middle East and fresh concerns over energy supplies and shipping through the Strait of Hormuz. At the same time, lower domestic inventories and limited spot availability have strengthened sellers’ pricing power. Although some buyers returned to replenish low-cost stocks, overall demand remained seasonally weak.

Import, Domestic and Export Prices Move Higher

China’s import PP market recorded the strongest gains, recovering much of the losses seen over the previous month. Homo PP Raffia and Injection grades increased by $100–150/ton, while PP Block Copolymer (PPBC) Injection prices rose by $120–150/ton.

The domestic market also strengthened significantly. Homo PP Raffia and Injection grades climbed CNY600–700/ton ($89–103/ton), while PPBC Injection increased by CNY800–900/ton ($118–133/ton). Many buyers preferred domestic cargoes due to shorter delivery times and lower logistics risks.

China’s export PP market also recovered after four consecutive weeks of decline. Export Homo PP Raffia and Injection prices rose by $50–130/ton, supported by stronger domestic prices and higher production costs.

Current PP Prices Compared with Pre-Conflict Levels
PPBC Injection – Import
Premium vs Pre-Conflict Level: ▲ $375/ton
Increase: ▲ 44%
PPBC Injection – Domestic
Premium vs Pre-Conflict Level: ▲ $373/ton
Increase: ▲ 37%
Homo PP Raffia & Injection – Import
Premium vs Pre-Conflict Level: ▲ $290/ton
Increase: ▲ 35%
Homo PP Raffia & Injection – Domestic
Premium vs Pre-Conflict Level: ▲ $328/ton
Increase: ▲ 34%
Homo PP Raffia & Injection – Export
Premium vs Pre-Conflict Level: ▲ $245/ton
Increase: ▲ 30%

These figures indicate that PP prices remain well above their pre-conflict levels, with the latest rally widening the gap once again after several weeks of correction.

Higher Feedstock Costs Drive the Market

The recent price increase has been largely supported by higher upstream costs. Brent crude oil gained around 10% during the week, while spot propylene prices in China increased by $60/ton to $980/ton CFR China. PP futures also strengthened by around CNY420/ton ($62/ton), encouraging suppliers to raise offers in anticipation of higher replacement costs.

Market participants noted that rising crude oil, propane, and propylene prices have become the primary drivers of the latest PP rally, with uncertainty surrounding Middle East shipping routes continuing to support bullish sentiment.

Limited Supply Supports Sellers

Apart from higher production costs, restricted spot availability has also strengthened the market. Although production rates have improved since earlier output reductions, inventories have not fully recovered, keeping overall supply relatively tight.

Many producers have adopted a cautious selling strategy, releasing limited spot volumes while monitoring market developments. Strong export demand has also helped reduce inventory levels, further supporting domestic prices.

Demand Improves Slightly but Remains Weak

Downstream demand remains subdued as the seasonal slowdown continues. Most converters are still purchasing only for immediate production needs and are avoiding large inventory builds.

However, stronger market sentiment has encouraged some buyers to replenish stocks when competitively priced cargoes become available. Market participants reported better trading activity at the lower end of price ranges, although purchases remain driven by short-term requirements rather than a broad recovery in end-user demand.

Overall, China's PP market continues to be supported mainly by higher feedstock costs and tight supply, while weak downstream consumption remains the key challenge for a sustained recovery.

Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.