Sep Propylene Prices to Inch Up amid Stronger Demand Support
Introduction: In August, propylene units were frequently restarted and shut down, particularly in northern China, making supply the primary factor influencing propylene prices. During this period, propylene prices experienced phased rebound due to fluctuations at some major units. Looking ahead to next month, propylene supply is expected to remain relatively ample. However, demand support is projected to strengthen, which may provide support for propylene prices.
China’s propylene prices rose and then fell in August, with the monthly average price decreasing and increasing MoM in different regions. In northern China, the shutdown of some units led to a phased reduction in the propylene supply, driving the propylene price upward. Up to August 21, the propylene average price in Shandong was RMB 6,372/mt, down 0.01% MoM. In the southern market, supply and demand fluctuated limitedly, and propylene prices were significantly influenced by the northern market. Up to August 21, the propylene monthly average price in East China was RMB 6,388/mt, down 1.50% MoM.
Northern China: Frequent fluctuations in unit restarts and shutdowns, with supply being the main driver of propylene price changes.
In northern China, propylene prices first increased and then decreased in August, and the monthly average price is expected to inch up MoM. On the cost side, prices of crude oil, propane, methanol, and other major feedstock fell by varying degrees MoM, weakening the cost influence on propylene prices. On the supply side, frequent fluctuation in unit restarts and shutdowns was the primary factor influencing propylene prices. In early August, the PO unit at Zibo Qixiang Tengda Chemical was restarted, so the propylene commercial volume decreased. The PDH unit at Shandong Binhua New Material was temporarily shut down, and the propylene used for PO units was purchased outside. In this context, propylene prices in the Shandong market increased. In mid-August, the PDH unit at Zhenhua Petrochemical was shut down for maintenance after running at lower loads, and the PDH unit at Tianjin Bohai Chemical was temporarily shut down, so the propylene commercial volume further decreased, driving propylene prices to a temporary high. However, PDH units at Shandong Tianhong Chemical, Zibo Xintai Petrochemical, and Tianjin Bohai Chemical were restarted, so the propylene market supply increased. Propylene producers cut prices to sell, so propylene prices decreased. On the demand side, cost pressures on downstream products remained relatively controllable in August. The periodic rise in propylene prices compressed profit margins for some downstream products. Downstream plants engaged in bargain-hunting periodically, showing insufficient acceptance for high-priced propylene.
Propylene Unit Maintenance in Northern China
Southern China: Supply and demand fluctuated limitedly, and the propylene price followed the movements observed in the northern market.
In August, propylene prices in southern China first increased and then decreased, and the monthly average price is expected to inch down MoM. On the cost side, crude oil prices decreased this month, weakening cost support for propylene prices. On the supply side, several new propylene units in southern China came online, but its influence remained relatively limited. Most propylene units ran normally in this region, and the imported propylene resources decreased, so the overall market supply changed limitedly. On the demand side, downstream plants purchased on rigid demand, and actual dealings were based on negotiation, resulting in generally moderate overall demand. In August, propylene prices in northern China fluctuated notably, which influenced the player sentiments. The propylene price in southern China largely followed the movements observed in the northern market.
Propylene Unit Maintenance in Southern China
Forecast: Propylene prices may inch up amid stronger demand support.
On the cost side, major feedstock prices decreased, and cost pressure on oil-based, PDH-based propylene decreased, weakening cost support for propylene prices. On the supply side, new capacity is expected to be released next month, and PDH units at Zhenhua Petrochemical, Quanzhou Grand Pacific Chemical, and Wanhua Chemical (Penglai) may be restarted. Although there is news that some PDH units may shut down, the probability remains uncertain. Propylene supply is projected to remain relatively ample in September, and propylene producers may continue to face periodic sales pressure. On the demand side, downstream products presented mediocre profitability, showing limited acceptance for propylene prices. However, some downstream units may be restarted, so the propylene demand may increase. At the same time, the demand peak season is approaching in September, coupled with pre-holiday stocking ahead of the National Day in late September, which is likely to provide support for propylene demand. Overall, propylene cost and supply may inch down next month, while demand support may strengthen. Propylene prices are expected to fluctuate within a narrow range, and there is a high probability that the monthly average price may inch up MoM.
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