Mar Propylene Prices May See Narrower Fluctuations
Introduction: In February, propylene prices fell from highs as the support from demand and supply turned from strong to weak. In March, propylene prices may fluctuate limitedly amid the tug-of-war between supply and demand.
In February, propylene prices dropped from a high level, with the monthly average price inching down MOM. In the northern market, propylene prices went down as the supply-demand support turning from strong to weak. As of February 21, the monthly average price of propylene in Shandong stood at RMB 6,861/mt, down 1.32% MOM. In the southern market, propylene prices were stable-to-decreasing on manageable supply pressure and continuously weakening demand. As of February 21, the monthly average price of propylene in East China was RMB 7,043/mt, down 1.44% MOM.
Propylene prices in the northern market fell from highs.
In February, propylene prices in the northern market dropped from a high level, with the monthly average price inching down MOM. At the beginning of February, propylene resources flowing to Shandong declined due to low efficiency of transportation, and some units were shut down or ran at lower loads, so the propylene supply tightened. In addition, some downstream plants replenished stocks after the holiday, boosting the demand for propylene and leading propylene prices to constantly inch up. However, propylene price rises exerted heavier cost pressure on PP plants, and the demand for propylene weakened with downstream replenishment coming to an end. Moreover, more propylene plants had restart plans, indicating expectedly increasing supply, so downstream plants held wait-and-see sentiments, and sales pressure on propylene producers intensified, followed by a drop in propylene prices. Approaching H2 February, cost pressure on PP plants eased with propylene producers cutting prices to promote sales, and PP plants showed higher positivity in restarting, underpinning the demand for propylene. However, propylene supply presented an upward trend, inhibiting the space of price rises. Therefore, propylene prices fluctuated within a narrow range.
Propylene prices in the southern market were stable-to-decreasing.
In February, propylene prices in the southern market were stable-to-decreasing, with the monthly average price inching down. On the cost side, crude oil prices fell, weakening the cost support for propylene prices. On the supply side, some propylene units were restarted or took maintenance, little impacting the overall supply, and the inventory pressure at propylene producers was under control. Propylene offers were adjusted based on Shandong propylene prices. On the demand side, the overall demand was weak, and downstream showed low acceptance for some high-price propylene resources, which was one of the reasons for propylene declines.
Propylene prices may fluctuate within a narrow range amid intensifying supply-demand game.
In March, some newly added capacity may be released, and some overhauled units may be restarted, so the propylene supply may remain on an upward trend, exerting some sales pressure on propylene producers. On the demand side, end demand may gradually recover, and the cost pressure on PP plants may be eased, leading to higher PP unit operating rates and shoring up the demand for propylene. Chemical downstream plants are expected to engage in bargain-hunting, indicating steady demand for propylene. Therefore, propylene price fluctuations may be limited.
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