Introduction:China PP market delivered unexpectedly strong performance in H1 2026, PP filament at ~9,670 RMB/mt by mid-May, up 3.6% from start of year. Geopolitical conflict elevating crude costs, unplanned plant shutdowns tightening supply, and restocking demand drove the rally. However, massive capacity release in H2 against softening demand is building.
1. H1 PP Strength Drivers
PP broke traditional seasonality. After US-Iran escalation in late February, crude surged above $110/bbl from ~$100. Multiple PP units underwent unplanned maintenance. PP filament May 19: 9,670 RMB/mt, +1.26% from early May; PP fiber: 9,937.5 RMB/mt, +1.53%.
PP Grade Performance
| Grade | Price | Change vs. early May |
|---|---|---|
| PP Filament | 9,670 RMB/mt | +1.26% |
| PP Fiber | 9,937.5 RMB/mt | +1.53% |
| CPL (East China) | 11,800 RMB/mt | -150 RMB/mt |
| PA6 Chip | East China steady | Rangebound |
Dual Support
- Geopolitical cost premium:US-Iran conflict pushed crude from $95 to $108+/bbl, raising oil-based PP cash costs by ~500-600 RMB/mt.
- Supply contraction:Multiple PDH units had unplanned maintenance in Q1, new capacity delayed, supply 5-8% below expectations.
- Restocking demand:Post-LNY restocking in packaging and injection molding, brief export pickup.
2. Nylon Chain Cooling
CPL East China fell to 11,800 RMB/mt, down 150 RMB/mt. Benzene FOB Korea dropped $5/mt to $1,070-1,075/mt. This divergence confirms demand weakness is the decisive factor.
3. H2 Outlook
Over 2 million mt/year new PP capacity scheduled for H2. Supply growth could accelerate from ~3% to 8-10%. Weak real estate, auto destocking, slowing packaging demand. PP may correct from 9,600-9,700 to 8,800-9,200 RMB/mt, with annual low in late Q3-early Q4.
