The Chinese PP market has seen an increase in operating rates to around 90% this week. This has put some pressure on supply as the stocks built up ahead of the holidays are worked through now. On the production side, the facilities using oil-based feedstock are still facing challenges. Oil-based PP margins are close to break-even levels. The facilities running on coal, such as PDH plants, continue to enjoy relatively strong margins though. Demand for packaging film PP grades has improved somewhat. BOPP grades remain unpopular though. With the domestic market balanced, the import window is closed and the export one is still open.

All PP prices on a CFR China basis have stayed unchanged. The most actively traded PP futures for April delivery have gone CNY 66/t ($9/t) up week on week to CNY 7,445/t (almost $1,035/t) EXW on China’s Dalian Commodity Exchange this Thursday.

PP demand is expected to improve seasonally. However, excessive supply may continue weighing on the market. PP prices are likely to hold steady next week in view of high domestic output.