January Propylene Mainstream Price May Rebound
Lead: In December, China’s propylene market was weak overall and faced high pressure from cost, supply and demand sides. Therefore, the mainstream market price fluctuated downwards. In January 2022, China’s propylene market may gain stronger support from the supply side, but the demand is expected to be mediocre. Therefore, the mainstream market price may rebound but with a limited range.
In northern China, the propylene market remained soft. The mainstream market price of propylene fluctuated downwards, but the decrease slowed down somewhat. As of December 21, the propylene market price in Shandong was RMB 7,400-7,400/mt, down RMB 110/mt or 1.47% M-O-M.
In southern China, the propylene market price tapered down slightly due to the lack of bullish factors. As of December 21, the propylene market price in East China was RMB 7,350-7,400/mt, down RMB 100/mt or 1.33% M-O-M.
Northern China: Mainstream price of propylene trended downwards due to thin support from the cost, supply and demand sides.
In December, the mainstream market price of propylene trended down in northern China. Prices of crude oil and propane continued to fall back, weighing on the propylene market. On the supply side, the propylene unit status in Shandong was largely stable, and the overall supply of propylene market was controllable. However, the phased sales pressure on propylene producers heightened. On the demand side, at the beginning of this month, some newly added downstream units were started up, underpinning the propylene market. However, the PP market was sluggish, and the limited profit from PP powder obviously hindered the demand for propylene. Downstream producers mostly purchased on rigid demand and held thick wait-and-see mood. Therefore, the overall demand for propylene was tepid.
Southern China: The propylene price continuously slid because of the weak PP market and supply-demand fundamentals.
In southern China, the propylene market price edged down in December. PP futures and spot prices went weak, which was the key factor dragging down the propylene market. Moreover, the supply-demand fundamentals also underperformed. The propylene supply was ample, but downstream producers mostly maintained basic purchase. In addition, market participants’ sentiment was bearish, so the overall trading atmosphere was lukewarm.
In January 2022, the mainstream price of propylene is likely to rebound but with a limited range.
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