Propylene Production Profit Declined in Q3
In Q3 (as of September 22), the gross profit from propylene production dropped by 71.60%. The production cost via most of processes continued to rise, but the increase in propylene market prices was limited, so the propylene production profit continued to drop. As of September 22, the weighted cost of different processes rose by 7.72%, while the propylene market price in Shandong fell by 4.00%. In the future, the propylene production profit may further slide in Q4 from the perspective of feedstock price and propylene price.
Production cost continuously increased, and the gross profit slipped by more than 70% in Q3.
Chart 1 2020-2021 Propylene Cost and Gross Profit Comparison
According to SCI, as of September 22, the quarterly average price of propylene declined by 4% Q-O-Q. The weighted cost went up by 7.72%, and the gross profit fell by 71.60%. Since Q3, the propylene price has continuously fluctuated. Although the price did not decrease significantly supported by high cost, the bearish supply-demand fundamentals and cautious market sentiment caused the propylene price to edge down. In terms of cost, prices of methanol, coal and propane continuously increased, so the overall cost further climbed. The main downstream PP market became soft hindered by high cost and weak supply-demand fundamentals, dragging down the propylene market.
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