Asian PGFC to Remain Bearish Under Weak Demand Pressure in September 2024

In September 2024, the Polypropylene Glass Filled Compound (PGFC) market is likely to grapple with weak fundamentals in Asia, driven by both supply and demand challenges. The supply side is more inclined toward reduction rather than expansion in the short term, making it difficult to alleviate inventory pressures.

Factory inventories of PGFC are expected to reach new highs in September 2024, reflecting an imbalance between supply and demand in Asia. The growing stockpiles suggest that any significant rebound in prices is unlikely in the short term. Similarly, the glass sector has not provided any substantial relief, as daily float glass output across the region continues to decline, while total inventories for sample float glass companies continue to rise, underscoring the persistent weakness in the PGFC market. In the glass sector, demand remains underwhelming, although some manufacturers have introduced price guarantee policies to stimulate transactions. The glass futures market is anticipated to remain volatile, with spot transactions closely monitored for any momentum shifts.

Regionally, North China has seen a marginal improvement in downstream purchasing activity during the second half of the month, but this has been insufficient to curb the overall growth in inventory. In South China, only a few companies have experienced robust shipments, while most are facing average performance and rising stockpiles. The Southwest continues to experience inventory accumulation, whereas the Northwest region has seen a significant decline in inventory levels, with production and sales slightly improving compared to the previous week. In the Northeast, a lack of enthusiasm for purchasing has contributed to further inventory growth.

On the demand side, the situation has deteriorated further in September 2024. A rapid decline in PGFC futures prices is resulted from the dampened purchasing sentiment of downstream processing plants. This has led to a notable reduction in enterprise shipments, prompting continuous cuts in the prices of PGFC. With overall market fundamentals remaining weak, company inventories have soared to the highest levels seen in five years for this period, dimming short-term market prospects.

The prevailing weak demand for PGFC remains the primary factor weighing on market fundamentals. Although supply reductions offer potential support, their impact has yet to be fully realized. The ongoing decline in PGFC prices has motivated some producers to undergo overhauls, leading to reduced output levels, which have now fallen significantly below normal production rates. However, despite these supply-side adjustments, demand remains insufficient, and shipments by PGFC manufacturers continue to languish at the lower end of the range.

As per ChemAnalyst, the outlook for PGFC seems bleak. Supply and demand fundamentals are expected to stay weak in the coming weeks, with little support for a price recovery. Until there is a significant improvement in market fundamentals, PGFC prices are likely to continue their downward trend.