September Propylene Price Decrease to Slow Down
Introduction: In August, the propylene price continued to go down due to weak cost, supply and demand sides. In September, the propylene market will still face certain supply and demand pressure, but some bullish factors will support the market. Therefore, the decrease in propylene prices is likely to slow down.
In August, China’s propylene market prices moved down. Hereinto, the propylene market price in northern China dropped most of the time, and the mainstream price went down. As of August 23, the mainstream market price of propylene in Shandong was RMB 6,800-6,800/mt, down RMB 510/mt or 6.98% M-O-M.
In southern China, the propylene market was also weak in August, but some bullish factors resulted in a narrow decrease range. The posted price at main producers was largely stable, but the price of non-contract spot trended down. As of August 23, the mainstream market price of propylene in East China was RMB 7,050-7,100/mt, down RMB150/mt or 2% M-O-M.
Northern China: The propylene price continued to drop due to the weak cost, supply and demand sides.
In August, the propylene market price in northern China continued to fluctuate downwards. On the cost side, the international crude oil price dropped significantly, which was bearish for the propylene market. on the supply side, more PDH units in southern China took maintenance, and the release of newly added propylene capacity in northern China was delayed. However, the propylene inventory continuously accumulated in the earlier stage. Therefore, the propylene market supply was still sufficient, and propylene producers faced sales pressure most of the time. On the demand side, prices of PP futures and spot goods moved down, and the PP powder price fluctuated near the cost line, dragging down the propylene market. the overall profit of the downstream chemical markets underperformed, and downstream producers mostly chose to buy low-priced resources and held wait-and-see attitude. Therefore, the demand for propylene was mediocre.
Table 1 Northern China Propylene Unit Status
Southern China: The propylene market price fluctuated downwards due to weak fundamentals.
In August, the propylene market price went down. On the cost side, the international crude oil price decreased, dragging down prices of propylene in Shandong, PP futures and PP spot goods. On the demand side, the demand was weak. The operating rates of main downstream producers were low, and the purchase enthusiasm was not high. On the supply side, the main propylene units whose propylene was for outside sales were shut down, and some PDH units took maintenance. Therefore, the propylene market supply shrank, supporting the propylene price to some extent.
Table 2 Southern China Propylene Unit Status
Forecast: The propylene market price is likely to trend sideways at a low level in September, and the decrease may slow down.
On the supply side, the influence of the new capacity on the market supply may increase in September. Besides, the supply was much more than the demand in the earlier stage. Therefore, the supply pressure will not decrease in September. However, the operating rates at independent refineries in Shandong may slide due to some factors, which may ease the sales pressure on some propylene producers. On the demand side, the traditional demand peak season may drive the end demand to improve. If the PP market improves, the demand for propylene may rebound. The overall profit of the downstream chemical markets will be mediocre, and downstream producers will mostly operate agilely and purchase on rigid demand. In September, some newly added units of downstream chemical products may be successively put into operation, so the demand for propylene may grow. However, the delay in the commissioning will not be ruled out.
On the whole, the propylene market will continue to face certain supply and demand pressure, but some bullish factors may support the market. Moreover, the propylene price has continuously dropped for 4 months, and it has fallen to a low level. Therefore, the propylene market price may trend sideways in September, and the price decrease may slow down.
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