Stable-to-dipping Propylene Prices in November 2022
China’s propylene prices increased to high levels and then went down in October 2022 in the wake of changes in cost and supply and demand fundamentals. It is estimated that operating rates of propylene and downstream units will fluctuate more frequently, and the tug of war between supply and demand fundamentals is likely to become severer. Accordingly, SCI reckons that China’s propylene prices may be stable-to-dipping in November 2022.
China’s propylene prices increased to high levels and then fell in October 2022. In northern China, the overall market trading performed well in H1 October but gradually weakened after mid-October. In southern China, propylene prices in Shandong, PP futures and spot prices fluctuated upward in H1 October, slightly propping up propylene prices. Entering H2 October, the overall regional transportation was tough, and propylene prices in Shandong went down. Accordingly, the negotiation prices of propylene in East China declined.
Northern China: Propylene prices moved downward after increased to high level.
The international crude oil prices kept rising for five days during the National Day holiday, giving strong support to propylene prices. Meanwhile, sales at propylene producers were stable, so the inventory at producers remained low after the holiday, underpinning propylene prices. Moreover, prices of propylene downstream products moved upward after the National Day holiday, and downstream users replenished stocks, lifting propylene prices. In mid-October, the international crude oil prices kept dipping, giving thin support to the propylene market. At the same time, some PDH units were restarted, and some newly added PDH units were likely to come on stream, resulting in the overall propylene supply increment. Accordingly, the propylene market sentiment underperformed. PP futures and spot prices declined, so profits from PP powder production narrowed notably. Prices of some chemical products waned, weighing down the overall propylene demand. On the backdrop of cost decline and tepid supply and demand fundamentals, most market participants adopted wait-and-see attitudes to the propylene market after mid-October. Therefore, propylene prices moved downward.
Northern China Propylene Unit Status
Unit: kt/a
Southern China: Propylene spot prices moved upward due to tight supply.
Propylene prices in southern China increased at first and then declined. The demand improvement and cost support were major factors lifting propylene prices. The international crude oil prices kept rising during the National Day holiday, lifting propylene costs and significantly supporting the market sentiment. Moreover, propylene prices in Shandong and China’s PP prices moved upward, so propylene prices in East China inched up. In H2 October, the propylene supply and demand fundamentals underperformed, as sales in major producing areas were sluggish. Accordingly, propylene spot prices tapered down. With the approach of the end of October, the overall market trading atmosphere was normal, so mainstream propylene producers maintained stable posting prices.
Forecast: China’s propylene prices will probably be stable-to-dipping with severer tug of war between supply and demand.
Few units will probably take overhauls in November, and PDH unit operating rates are likely to rise. Moreover, some newly added PDH capacity may come on stream. Accordingly, it is predicted that the overall propylene supply will rise. The overall propylene inventory at producers in Shandong may be largely rational. Meanwhile, the propylene demand will probably enter the slack season in November. Profits from PP production are likely to be average, weighing on propylene market. Besides, most newly added chemical projects are PO units, supporting propylene demand. On the whole, it is estimated that China’s propylene prices will be stable-to-dipping in November 2022, as there will probably be many changes in propylene and downstream unit status.
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