May Propylene Mainstream Price to Edge Down on Rising Supply
In April, the propylene market was stuck between bearish factors and bullish factors, and the mainstream price fluctuated within a narrow range. In May, some newly added units are planned to go into operation, which will causing the propylene supply to increase. Therefore, the mainstream price is likely to slide slightly.
In northern China, the propylene market was stuck between bearish factors and bullish factors, and the mainstream price fluctuated within a narrow range. The monthly average price of propylene in April may inch down. As of April 25, the mainstream market price of propylene in Shandong was RMB 8,400-8,450/mt, up RMB 275/mt or 3.37% from the end of March.
In southern China, the propylene market was weak. The posted price at main producers continuously slipped, and the negotiation price of non-contract spot followed the downtrend. As of April 25, the propylene market price in East China was RMB 7,900-8,000/mt, down RMB 325/mt or 3.93% from the end of March
Northern China: The propylene price was range-bound.
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In northern China, the propylene market was stuck between bearish factors and bullish factors in April, and the price fluctuated within a narrow range. On the cost side, the crude oil price mainly fluctuated, giving uncertain guidance to the propylene market. However, the feedstock price was still high, and the production profit of propylene via most production technologies was negative. The propylene market still faced heavy cost pressure. On the supply side, the unit shutdown and unit restart co-existed, so the supply pressure was low. The inventory at most propylene producers was controllable, supporting the propylene price. On the demand side, the production profit of PP powder and acrylonitrile remain negative, and the acetone and PO markets also faced rising cost pressure. The comprehensive operating rate of downstream units was still low, and the operating rates of downstream units slid slightly. Therefore, the demand for propylene was mediocre. In addition, logistics and transportation also had certain influence on the upstream and downstream market trading, but that in mainstream trading areas of northern China improved compared with previous days.
Southern China: The influence of market atmosphere became main driver, and that of supply and demand weakened.
In April, the propylene market price in southern China inched down. The weak demand hindered the propylene market, while the high cost and decreasing supply were a boon to the propylene price. First, most players were pessimistic and showed low enthusiasm for operating due to the low transportation efficiency, so the demand for propylene shrank significantly. Second, the propylene supply decreased slightly. Most PDH companies reduced the operating rates hindered by the underperformed profit, so the monthly supply of propylene dropped, boosting the propylene price. Third, the international crude oil price trended sideways at a high level, and the price of imported price also remained high, causing the PDH companies to remain in profit loss. Therefore, the overall production enthusiasm lowered. Fourth, in southern China, the bearish impact of weak demand was larger than the bullish impact of decreasing supply and high cost. Therefore, the propylene market price slid.
Forecast: The propylene mainstream price is likely to edge down in May due to rising supply.
On the cost side, the feedstock price will be high, but the profit of propylene industry will underperform. The propylene market will continue to face heavy cost pressure, supporting the propylene price. On the supply side, the planned unit maintenance will decrease, as the weather turns warm, and some overhauled units will successively resume production. Moreover, some newly added PDH units in Shandong are expected to go into operation. Therefore, the propylene supply will grow in May. On the demand side, the profit of the PP, acrylonitrile and other industries will underperform, and the comprehensive operating rate of downstream units will be low, dragging down the demand for propylene. However, there will be commissioning plans in propylene downstream industries, which may support the demand for propylene. In addition, the influence of logistics and transportation on the market trading needs to be focused on.
On the whole, the rising propylene supply will be bearish for the propylene market. Sci predicts that the mainstream market price of propylene will continue to inch down in May.
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