Lead-in: During this cycle, domestic propylene oxide (PO) prices held steady at high levels before facing increasing pressure. Support from the cost side weakened, while supply-side increments were gradually released. Previous bullish factors have faded, leading to a gradual decline in market negotiations. As of September 23, mainstream reference prices in Shandong and East China stood at CNY 11,085/ton ex-works (cash) and CNY 11,200/ton delivered (cash), representing decreases of 7.75% and 7.82%, respectively, compared to previous periods. With the Mid-Autumn Festival approaching, some downstream rigid demand purchasing has emerged, allowing the market to stabilize temporarily. However, due to insufficient bullish catalysts, there remains a risk of further downside.
| Metric | Sep 23 | Sep 1 | Change | % Change |
|---|---|---|---|---|
| Production Volume (10k tons/day) | 1.83 | 1.76 | +0.07 | +3.98% |
| Capacity Utilization Rate | 68.50% | 65.81% | +2.69 pp | / |
| Commodity Volume (10k tons/day) | 1.16 | 0.92 | +0.24 | +26.09% |
Data Source: Chempricehub Information
On the supply side, as of September 23, domestic daily PO production reached 18,300 tons, an increase of 3.98% from the beginning of the month. The capacity utilization rate rose by 2.69 percentage points to 68.50%, indicating a narrow increase. However, the actual commodity volume surged by 26.09% to 11,600 tons. Compared to early September, major producers such as Lianhong, Satellite Chemical, and Qixiang are operating normally, with all output currently available for external sale. Although Zhejiang Petrochemical recently reduced loads, this had no significant impact on commodity volume. Consequently, the increase in market tradable supply exceeded the increase in total production, reducing the supply-side support compared to the start of the month.
With the Mid-Autumn Festival imminent, active plants have seen improved shipment rates following recent price cuts, primarily resulting in slight inventory reductions that alleviated earlier pressure. However, this trend appears limited in duration. Today, as market sentiment cooled again, reports emerged of negotiable offers from certain suppliers. Given that supply volumes are expected to remain elevated, price support is anticipated to be limited.
On the demand side, during the previous period, downstream clients reported difficulty passing on higher PO costs to end-users, leading to reduced procurement. This cycle, as PO prices gradually retreated, attention from all parties increased. Additionally, with the holiday approaching and concerns over potential logistics restrictions, downstream customers made follow-up purchases to release some pre-holiday rigid demand, improving market trading activity.
Looking ahead, downstream sectors will likely conduct moderate restocking before the Mid-Autumn Festival, waiting for feedback from end-users to match their purchasing needs. However, considering the relatively high supply levels, caution persists among some participants, who may continue to wait and observe market performance before the National Day holiday.
The primary raw material, propylene, saw its price retreat this cycle due to the continued downward trend in international crude oil prices. As of September 23, the mainstream price in Shandong stood at CNY 9,375/ton, down 4.43% from CNY 9,810/ton last Wednesday. Liquid chlorine prices experienced a narrow upward movement. Overall, cost-side changes were minimal. Since there was previously some profit margin, the impact of costs has diminished recently. The downtrend in crude oil and propylene has exerted negative pressure on market sentiment.
In the short term, international crude oil remains weak. Propylene producers show divergent sales performance, keeping market sentiment cautious and suppressing price trends. Liquid chlorine prices are consolidating at relatively high levels. Some downstream products have shifted from profit to loss, triggering resistance to current pricing. Producers have slowed shipments, leading to a gradual accumulation of inventories. Prices in some regions face downward pressure. The cost side is expected to remain stable but weak, offering limited support to prices, though it may provide some floor value at lower levels.
In the short term, after briefly alleviating pressure, supply-side shipments have weakened again. Downstream demand feedback indicates limited incremental growth, while the cost side runs stable but weak. With insufficient bullish factors, there remains room for further downside.
Before the National Day holiday at the end of the month, the market awaits another dip to lower price levels, which may trigger small-scale opportunistic buying. In the medium to long term, with supply running relatively high, the market structure is loosening. A general trend of fluctuating declines in PO prices is expected, with margins passed on to downstream sectors. However, attention should be paid to whether volatile adjustments in crude oil prices can appropriately boost the market.
Comments
0