Will Influencing Factors for Propylene Change in Q4?
Lead: In Q3, 2021, the competition pattern in the C3 industrial chain changed significantly. Propylene market prices went up overall supported by cost and PP market. The increase in propylene supply came in short of expectations, and the downstream demand also grew, buoyed the propylene price. The rise in feedstock prices enhanced the propylene price level, but the increment in propylene prices was smaller than that in feedstock prices. Therefore, the gross profit rate of propylene slid obviously. In Q3, 2021, the propylene market price increased by 11.39% Y-O-Y but decreased by 3.58% Q-O-Q.
The main influencing factors were as follows. First, the PP market hindered the rise in propylene prices. The correlation between propylene price and PP price was strong, and underperformed price and profit of PP significantly hampered the rise in propylene prices. Second, the downstream demand for propylene grew Q-O-Q. The profit of downstream chemical industries was favorable, and the consumption volume of propylene ramped up Q-O-Q, supporting the demand for propylene. Third, the high cost propped the propylene price. Prices of propylene feedstock trended up, and propylene producers showed limited interest in cutting the price due to great cost pressure, which supported the propylene price. Fourth, the release of the newly added capacity was limited. The newly added propylene capacity continued to be released, but the influence was small. The overall propylene supply changed limitedly.
Chart 1 Q3, 2021 Propylene Industrial Chain Price Change
The quarterly average price changes showed that the fluctuation range of propylene price was smaller than that of feedstock price, and was much smaller than that of downstream chemical products price. Judging from the Y-O-Y change, the price trends of propylene and PP were basically the same, but they were obviously weaker than the feedstock and downstream chemical product price trends. From feedstock price, prices of crude oil, coal, methanol and propane moved up, and the increase in thermal coal prices was larger, which enhanced the production cost of propylene. From downstream product price, prices of NBA, 2-EH, acrylic acid, acrylonitrile and ECH rose notably Y-O-Y, and the increment in acrylic acid prices was more obvious. This drove up the industry profit and supported the demand for propylene to a certain extent.
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