Introduction: Recently, the domestic propylene oxide (PO) market has shifted from stability to a downward trend, operating in a weak pattern. As support from downstream demand and cost factors diminished, market sentiment began to cool from last weekend. Following a slowdown in sales from PO suppliers, prices gradually softened and declined. By April 1, the mainstream ex-factory cash price in Shandong was RMB 12,000–12,300/ton, down by RMB 650/ton or 5.08% compared with RMB 12,800/ton on March 27. Market sentiment is currently divided, and prices may consolidate temporarily with limited room for further decline.

Supply: Slight Increase in Output; Attention on Whether Planned Maintenance Will Materialize

From the supply perspective, as of April 1, domestic PO daily output reached 19,300 tons, a slight increase of 800 tons compared with March 27. The daily capacity utilization rate rose by 0.48 percentage points to 72.37%. With limited market fluctuations and steady incremental supply, downstream procurement has slowed, putting some pressure on operations.

Looking ahead, in the southern market, only the new plant in Zhejiang is ramping up output, while several major plants still have maintenance plans. Although some maintenance may be delayed, inventory requirements are relatively low, and with a substantial backlog of previous orders to fulfill, external sales volume may be limited. This is expected to provide some support and cushion, narrowing the room for further PO price declines. In the northern market, attention will be on whether HPPO units reduce output due to upstream raw material constraints. Overall, the northern market is likely to remain relatively stable compared with the south.

Demand: Mainly Passive Follow-Up; Market Sentiment Remains Cautious

On the demand side, during the previous upward trend, polyether prices rose more sharply in the latter half, but high-price transactions were limited. Currently, with multiple overseas units reducing output due to supply chain impacts, there is a certain supply gap. Polyether export orders are performing relatively well, while domestic trade remains subdued. End customers are adopting a wait-and-see attitude toward high prices and this week's downward trend, mostly waiting for lower price points. Some are making purchases based on rigid demand. Today, market sentiment is divided, with both price pressure and support coexisting.

In April, downstream demand is expected to rely mainly on export order support. Although acceptance of high prices is limited, considerations about future raw material uncertainties may lead to some follow-up procurement after prices adjust appropriately, pending feedback from end-users.

Cost: Narrow Fluctuations; Impact Slightly Weaker Than Before

This week, propylene and liquid chlorine prices both showed an initial rise followed by a decline. In terms of representative PO production processes, as of April 1, the theoretical profit for the chlorohydrin process was RMB 1,622.05/ton, while for HPPO it was RMB 925.3/ton. Other processes also maintained healthy profit margins. The impact of cost factors has weakened compared with earlier periods, with more attention now on the stability of future raw material supply, particularly from petrochemical enterprises or plants with planned maintenance.

Looking forward, as PO maintains favorable profitability, unless there are significant fluctuations in raw material costs, the impact on PO prices is expected to be limited. Any influence is more likely to be reflected in market sentiment and potential adjustments to PO plant operating rates.

Outlook: Short-Term Consolidation with Weak Bias; Monitor Actual Supply-Demand Fluctuations After Intensified Contention

In the short term, during this week's downward trend, certain regional and sentiment divergences have emerged. Complex and volatile external factors have led to intertwined bullish and bearish influences in the market. With intensified disagreements at this stage, prices may temporarily consolidate to digest disparities. After the holiday, narrow fluctuations are expected, possibly with an initial dip followed by a rebound.

From a medium- to long-term perspective, after an appropriate price decline in April, potential supply-side maintenance may still provide support, limiting the overall downside. Once prices reach levels acceptable to all parties, downstream buyers may gradually increase procurement, creating some potential for a rebound. The average price range for the entire month is preliminarily projected to be around RMB 11,500–12,500/ton. Attention should be paid to whether supply-demand fluctuations materialize from mid- to late April and their timing.