Entering the traditional peak-demand September season, the domestic PP market has experienced a stage of strong upward momentum, with cumulative prices climbing 6.5% since the start of the month. This round of gains is driven primarily by dual bullish factors: Middle East geopolitical tensions pushing up crude oil prices, and tight structural supply resulting from concentrated plant turnarounds. However, insufficient downstream seasonal demand follow-through and low acceptance of high-priced raw materials have significantly capped the upside potential.

With the bull-bear tug-of-war now at a fever pitch, the short-term market is firmly entrenched in a high-level consolidation pattern. The upcoming geopolitical meeting in Oman next week will serve as the pivotal catalyst for determining the next directional move in PP prices.

Recent Market Overview: High-Level Strength at the Start of September, Prices Edge Higher

Since the beginning of September, the domestic PP market has trended upward with volatility. Geopolitical conflicts in the Middle East have driven up crude oil prices, creating a cost premium, while the slow recovery in domestic plant operating rates and tight structural supply have combined as multiple bullish factors pushing spot prices noticeably higher. However, the lackluster realization of downstream seasonal demand, coupled with downstream factories' limited appetite for higher-priced feedstock, has constrained how far the rally could extend.

As of September 11th, the mainstream price for PP raffia grade in East China stood at 9,900-10,100 yuan/mt, up 610 yuan/mt or 6.50% from the beginning of the month.

Cost Side: Persistent Middle East Geopolitical Disruptions Cement a Firm Floor Under Oil Prices

The cost side has emerged as the most critical bullish pillar for the PP market this month. In early September, the ongoing volatile situation in the Middle East elevated shipping risks in the Strait of Hormuz, pushing international crude prices higher amidst fluctuating sentiment. As of September 10th, Brent crude reached $107.63 per barrel, a surge of 18.94% compared to August 31st. Upstream feedstocks like naphtha and propane followed suit, continuously increasing cost pressure on PP producers and providing sustained underlying support to the PP market.

Currently, the market's core speculative focus remains on geopolitical developments. A meeting between Iranian and Gulf Cooperation Council foreign ministers is scheduled in Oman next week, marking a critical window to observe short-term oil price trends and the ebb and flow of geopolitical risk premiums. Given repeated geopolitical news disruptions, oil price volatility has widened, and PP futures and spot markets are closely tracking these crude oil fluctuations. Market participants remain cautious, with little appetite for chasing highs, favoring rational trading behavior.

Supply Side: Slow Operating Rate Recovery Leads to Structural Supply Tightness

Although domestic PP operating rates have improved since August compared to May and June, they have consistently hovered around 70%. This month, several plants including Yan'an Refinery, Yanneng Chemical, and Datang Duolun entered scheduled major turnarounds. Additionally, unplanned shutdowns at facilities like Guangxi Petrochemical Phase II and Dushanzi Petrochemical have resulted in over 20% of industry capacity being offline, hindering the release of new supply. Data shows domestic PP production in August totaled 3.1789 million tons, a month-on-month increase of 3.12% but down 8.96% year-on-year.

Entering September, PP plant operating rates have still not shown a marked recovery. Concurrently, producers, wary of potential market weakening and price declines, are proactively accelerating their sales pace, leading to an increase in pre-sold orders. This maintains a tight pattern for spot resources, highlighting structural grade-specific shortages. This supply tightness continues to provide solid support to spot prices.

Demand Side: Seasonal Demand Recovers, But Price Resistance Caps Rally

Entering the traditional "Gold September" peak season, operating rates in downstream PP sectors such as woven bags, injection molding, and BOPP film have shown signs of recovery from the August lull. Specifically, operating loads in modification, BOPP film, woven bags, and injection molding have each increased by 2-3 percentage points compared to late August. Factory restarts have led to improved rigid demand procurement month-on-month, providing a foundational boost to the PP feedstock market.

However, the strength of end-user demand recovery is weak. While new orders have seen slight improvement, product selling prices remain at elevated levels, compressing downstream order-taking capacity and slowing order growth. Additionally, as feedstock prices operate in a high range, downstream product manufacturers face sustained cost pressure and squeezed profit margins. Their resistance to high-priced raw materials is strong, leading to cautious purchasing intentions and little active chasing of price increases

Currently, the realization of "Gold September" seasonal demand has fallen short of expectations. The weaker-than-anticipated seasonal boost stands as a core bearish factor suppressing PP price gains, limiting the momentum for any near-term rally.

Outlook: Balanced Bull-Bear Forces, Short-Term High-Level Consolidation Expected

The short-term PP market lacks clear directional guidance, maintaining a high-level, broadly fluctuating pattern. Sentiment is highly cautious ahead of the geopolitical meeting, with intensified bull-bear speculation and prudent trading operations. If the Oman meeting signals a de-escalation in tensions, the geopolitical risk premium in crude oil could recede, weakening the cost support for PP and potentially triggering a market pullback. Conversely, if geopolitical tensions escalate, oil prices are likely to remain strong, continuing to underpin the PP floor.

Structural supply tightness is expected to persist in the short term, with continued support for rigid-demand grades. While demand is recovering, its strength is limited and insufficient to drive a sustained trend upward. Overall, with weak short-term supply-demand contradictions, PP prices are forecast to trade primarily within a 9,700-10,200 yuan/mt range. Key factors to monitor will be the progress of the Oman geopolitical meeting, oil price volatility, and the actual realization of downstream order commitments.