China Propylene Prices to Remain Low in June
China’s propylene prices moved downward in May. The overall feedstock prices were curtailed, so the cost support for propylene market weakened. Moreover, given the propylene unit restart and sluggish PP market, the overall propylene market supply and demand fundamentals became mediocre, weighing down propylene prices. Entering June, it is predicted that the production costs will give thin support to China’s propylene market, and the overall propylene supply may remain high. Moreover, the demand for propylene is likely to witness limited improvements. Overall, it is estimated that China’s propylene prices will remain low in June.
China’s propylene largely dropped in May, and the monthly average price moved downward M-O-M. Therein, the cost support for propylene market in northern China waned, and the overall supply and demand fundamentals underperformed. As of May 24, 2023, the monthly average price of propylene in Shandong was RMB 6,768/mt, down 4.72% M-O-M. In southern China, the propylene demand remained tepid, so propylene price kept dipping. Meanwhile, some newly added units were put into use, and some units were restarted, lifting the overall propylene supply. As of May 24, 2023, the monthly average price of propylene in East China was RMB 6,630/mt, down 5.81% M-O-M.
Northern China: Propylene prices moved downward with cost decline and sluggish supply and demand fundamentals.
Propylene prices in northern China largely declined in May, and the monthly average price dwindled M-O-M.
Cost: The international crude oil prices and China’s propane prices saw declines in May, so the cost support for propylene market weakened somewhat.
Supply: Some propylene units were restarted in succession, and the PDH unit operating rate saw a notable increment. Accordingly, the overall propylene supply rose, and propylene producers experienced severer sales pressure. Therefore, propylene prices hit an annual lowest level.
Demand: PP prices fluctuated downward, so PP powder producers experienced severe profit losses, dragging down the demand for propylene. Some chemical downstream units took overhauls, exerting bearish impacts on propylene demand.
Northern China Propylene Unit Status
Southern China: Propylene prices fluctuated downward amid sluggish supply and demand fundamentals.
Propylene prices in southern China fluctuated downward in May, and the monthly price decline further enlarged. Propylene prices in East China were stable-to-dipping in May. The consumption of PP and other downstream products entered the traditional slack season, and PP futures prices kept dipping, weighing on propylene spot market in East China. Sales at propylene producers were sluggish, so the overall propylene inventory at producers went up, dragging down propylene posted prices. By the end of May, most market participants still adopted bearish attitudes to propylene market. With the new unit at Jiangsu Yanchang Zhongran Chemical and other new units coming on stream in succession and unit restart, the overall propylene supply is likely to further increase. Moreover, it is estimated that the overall downstream demand in southern China will see minor improvements in the short term. Accordingly, it is predicted that propylene prices will continue to decline in early June. With propylene prices declining to low levels, downstream procurement enthusiasm will probably recover, and the overall propylene price is likely to reverse its losing streak.
Southern China Propylene Unit Status
Forecast: China’s propylene prices will probably remain low, as the cost support may weaken and the market supply and demand fundamentals are likely to be in the doldrums.
Cost: Propylene feedstock prices may be relatively low, so it will probably give thin support for propylene costs.
Supply: With unit restart and new units being put into use, the overall propylene supply will probably be ample, so propylene producers are likely to experience severe sales pressure.
Demand: Profits from PP production may underperform, dragging down the propylene demand. However, some chemical downstream units may be restarted, supporting propylene demand somewhat.
Overall, both production costs and supply and demand fundamentals may be sluggish in June, so it is estimated that China’s propylene prices will hover at lows, and the monthly average price may go down M-O-M.
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