The gap in PP raffia prices between Southwest China and East China increased at first but then diminished in Q3, and the overall fluctuation range was large. According to historical data, this gap usually hovers within RMB 50/mt, while it climbed a lot to RMB 210/mt in early September. It recovered to a normal range again until mid-October.

China’s PP prices in Southwest China have remained higher than those in East China in Q3, 2024, especially since August. In Southwest China, intensive turnarounds of raffia-grade PP units and raffia output cuts at some producers impacted the overall availability of resources from July to August. Later in mid-September, PP market prices rebounded, underpinned by the warming macro environment. However, the upward range of raffia prices in Southwest China was narrower than that in East China, leading to a diminishing price spread between these two regions.

The supply of PP raffia climbed noticeably in Southwest China from September to October, pressuring the price there. Taking Sichuan and Chongqing as examples, resources that circulated in the market mainly came from PetroChina Sichuan Petrochemical, Shenhua Ningxia Coal Industry, Shenhua Yulin Energy Chemical, Shenhua Xinjiang Energy, China Coal Shaanxi Yulin Energy & Chemical, Ningxia Baofeng Energy and Shaanxi Yanchang Petroleum Yan’an Energy & Chemical. PP raffia output at Shenhua Yulin Energy Chemical and Shenhua Xinjiang Energy grew by 26.1% MOM in September and remained largely stable in October. Ningxia Baofeng Energy Phase III and Shaanxi Yanchang Petroleum Yan’an Energy & Chemical restarted units in early August and continued to produce raffia materials at the end of August, so more resources were allotted to Southwest China. At PetroChina Sichuan Petrochemical, raffia allocation rose by 7.69% MOM in September and climbed by 53.57% MOM in October, reaching a yearly high. Generally, local supply and allocation from other regions all mounted up, leading to higher supply pressure of raffia in Sichuan and Chongqing. PP raffia prices there saw a narrower upward range and may decline at a quicker rate in the future.

In the future, it will be difficult for the supply pressure of PP raffia to be eliminated. According to SCI’s research, the maintenance unit affecting the supply of PP in Southwest China in the fourth quarter may be only Sinopec-SK (Wuhan) Petrochemical, and it does not involve the supply of raffia. However, the 500kt/a PP unit of Ningxia Baofeng Energy will probably be put into operation at the end of October and produce raffia materials in the initial stage of startup. Therefore, it is expected that the PP market may still face certain supply pressure in the long run with less unit maintenance and capacity expansion simultaneously.