Weak demand, rising supply to weigh on China PP market in Q3

SINGAPORE (ICIS)–China’s polypropylene (PP) market looks bearish in the third quarter amid weak demand and increasing supply, market players said on Monday.

Fresh supply will hit the market with new capacities that started up in the second quarter, they said, citing that a couple of months are needed for the new plants to run at full rate.

China Coal Mengda New Energy & Chemical Industry’s new 300,000 tonne/year plant is scheduled to start up in end-April or May, while Xinjiang Shenhua Chemical Industrial’s new 360,000 tonne/year plant is due to commence production in end-May.

Market participants are also worried about the current weak buying sentiment from end-users amid volatility in the crude and PP futures markets.

Demand is expected to weaken in the third quarter, with downstream manufacturers seen cutting operation during the summer months, market sources said.

From home appliance manufactures, PP demand will soften as most of them have started restocking on raw material in the second quarter, they said.

Some local PP producers typically schedule maintenance at their plants during the third quarter, and this could provide support to the market, industry sources said.