2022 (Jan-Oct) China Propylene Market Price Review
From January to October 2022, the propylene price in China first rose and then declined, and the average price edged down.
In 2022, the propylene price showed an irregular N-shaped trend. As of October 31, the propylene market price in Shandong was RMB 7,050/mt, down RMB 475/mt Y-O-Y. The highest price of the year was RMB 9,300/mt on March 8, while the lowest price was RMB 6,800/mt, which appeared on August 23 and 24. The maximum price spread was RMB 2,500/mt. The M-O-M decline in the propylene price in 2022 was mainly due to the market imbalance from rising supply and weakening demand. Meanwhile, the propylene profit also shrunk, and producers were less willing to lower prices given common operating losses within the industry, which lent bottom support to the market price.
From a long-term perspective, the propylene price in 2022 sustained a wide fluctuation from 2021, but the velocity was slightly narrower. The maximum spread between the highest and lowest prices in 2021 was RMB 2,800/mt. As seen from seasonality, the seasonal characteristics of the propylene market in 2022 differed from the historical pattern of the past decade. In particular, the propylene price from May to August broke the usual seasonality and went apparently lower than the average level, while it was generally on an uptrend seen from historical data. As seen from the two-year average price comparison, the average price from January to October 2022 was RMB 7,832/mt, down RMB 72/mt Y-O-Y. As compared to the 10-year average level, the average price in H1 of 2022 was at a medium to a high level, while that in H2 of the year was at a medium to a low level.
In 2022, The price trend of the domestic propylene market in China can be roughly divided into three stages. From January to March, the market climbed from highs; From April to August, the market fell constantly, and from September to October, the market rebounded from lows. The price of crude oil, the main feedstock of propylene, ramped up apparently from January to March, driving the propylene price upwards. Besides, there were multiple propylene unit maintenance schedules in China, and the tightened market supply further pushed the propylene price upwards. From April to August, the crude oil price fluctuated downwards, and the cost support to the propylene price diminished. Besides, due to poor cost conductivity, the profit rates of propylene and downstream products shrunk, and downstream players showed resistance to high propylene prices. Thus, the demand for propylene dropped constantly. On top of that, some newly added propylene capacity was released, and the domestic propylene market was in severe oversupply, forcing the price downwards. From September to October, the poor profitability of the propylene industry triggered unit turnarounds, and the release of newly added capacity was delayed to various extents. Propylene producers were determined to hold the price firmly. Besides, the previous propylene price drop facilitated rebounds in downstream profits. On top of that, better market demand in the traditional autumn peak season also alleviated market supply pressure, and the propylene price rebounded from lows.
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