China's Propylene Market Analysis and Forecast

Highlights

China’s propylene prices fluctuated fiercely from 2014. Therein, propylene market prices collapsed from 2014 to 2015 but remained in an uptrend from 2016 to 2017. At the beginning of 2018, market players begin to focus on the market fluctuation. By analyzing crude oil market, supply-demand fundamentals and policies, SCI predicts China’s propylene market prices will be stable, and the price level will be high. The propylene market prices will fluctuate within a narrower range.

From 2014 to 2015, China’s propylene market prices remained in a downtrend due to the unbalanced supply-demand fundamentals and weak macro economy. Then from 2016 to 2017, the propylene market prices rebounded and kept rising. It not only benefited from improved supply-demand fundamentals and national policies. The propylene price rallied to the level three years before.

Looking back the propylene market in the past four years, we can find that both downward cycle and upward cycle are two years. Thus, the propylene market in 2018 should be closely watched. Maybe it will break through the regular pattern of the market fluctuation.

According to SCI, China’s propylene market prices will fluctuate within a narrow range at high levels in 2018. First, the propylene capacity may increase by 3,070 kt/a in 2018, combining traditional and emerging production technology. Besides, in propylene downstream industries, there will be newly added capacity in South China and East China, especially in the PP industry and PO industry. But the newly added propylene units will be limited in East China in 2018, so the supply of propylene will increase limitedly while the demand for propylene will increase obviously. That will give support to the overall propylene market.

Second, the environmental inspection will be stricter in 2018. Many related documents will be formally effective, which will produce a strong impact on propylene market and its downstream markets. The environmental inspection will promote the upgrade of enterprises and help the propylene industry to develop healthily and orderly.