Propylene concluded August at elevated levels, with expectations of mounting pressure in September.

Overview

In August, domestic propylene prices strengthened, mainly supported by firmer international crude oil prices, together with tighter supply from concentrated plant turnarounds and typhoon disruptions, as well as widening external procurement gaps at some downstream units. As of August 28, the monthly average propylene price in Shandong was 8,519 yuan/mt, up 4.86% month-on-month. Looking ahead to September, expectations of lower oil prices and incremental supply from the concentrated restart of maintenance units are likely to weigh on prices. Although some downstream units will resume operations, the narrowing external procurement gap at integrated plants will offset this, so prices are expected to ease slightly, with the monthly average likely to hover around 8,500 yuan/mt.

I. Supply Side: Restarts Release Incremental Supply, Supply Pressure Gradually Emerges

Table 1 Domestic PDH Unit Operating Status Overview (Unit: 10,000 mt)

In August, the scope of maintenance at domestic PDH, MTO, and cracking units expanded. MTO units at Chengzhi, Levima, and Bohua Development were shut down, while PDH units at Wanhua Yantai, Tianhong Chemical, and Liaoning Jinfah successively entered maintenance cycles. According to Chempricehub data, domestic propylene production in August was 5.0379 million mt, down 47,000 mt from July, a decrease of 0.92% month-on-month; capacity utilization was 68.50%, down 0.64 percentage points month-on-month.

By process, improved profitability at PDH units attracted some restarts, but due to the concentrated maintenance during the month, PDH capacity utilization in August was 72.9%, up 1.4 percentage points month-on-month. For naphtha cracking units, Shenghong Refining & Petrochemical restarted at the end of the month, lifting capacity utilization by 1.4 percentage points to 69.6%. MTO units were affected by maintenance at several plants, with capacity utilization falling 8.8 percentage points month-on-month to 71.1%.

Moving into September, units at Wanhua Penglai, Sierbang, Tianhong Chemical, and Liaoning Jinfah that were previously under maintenance are scheduled to restart, raising expectations of incremental supply. Production is expected to recover to 5.05 million mt, with capacity utilization rising to 71.30%. As of writing, there are no clear maintenance plans in September, but attention should still be paid to profit fluctuations and unit shutdowns caused by force majeure.

II. Demand Side: Demand Expected to Recover, Gaps Form an Offset

From the perspective of downstream operating rates, the downstream propylene sector continued to show divergence in August. Operating rates at key PP granules, PP powder, and octanol units rose slightly month-on-month, by 1.4, 0.4, and 0.1 percentage points, respectively. Operating rates for propylene oxide (PO), acrylonitrile, and acrylic acid declined month-on-month, by 0.3, 1.6, and 1.6 percentage points, respectively.

Entering September, some units under maintenance for PP, PO, octanol, acrylonitrile, and acrylic acid are expected to restart. Operating rates for PP, PO, octanol, acrylonitrile, and acrylic acid are expected to rebound, increasing by 1.6, 10.7, 7.1, 14.0, and 2.2 percentage points, respectively. Only PP powder operating rates are expected to decline, by 0.7 percentage point.

Overall, some downstream derivative units under maintenance are expected to restart, which should lift propylene demand. However, the narrowing external feedstock procurement gaps at some integrated supporting units will offset part of the demand increase from restarts. Meanwhile, the recovery of end-product consumption remains relatively slow, and downstream buyers are likely to maintain need-based procurement, making sustained volume expansion unlikely.

III. Supply-Demand Balance: From Tight Balance to Weakening, Supply-Demand Gap Widens Again

According to Chempricehub supply-demand estimates, total propylene supply in August was 5.2179 million mt and total demand was 5.2520 million mt, resulting in a deficit of 34,100 mt. The market shifted from a previous surplus to a tight balance, with low inventories and tighter supply pushing prices upward.

Looking to September, multiple units under maintenance on the supply side will resume production, and import volumes will continue to increase. Total supply is expected to reach 5.25 million mt, while total demand is expected to be 5.245 million mt, bringing the supply-demand gap back to 5,000 mt and transitioning the market from a tight balance in August to a slight surplus. The modest rebound in supply pressure will weigh on propylene prices.

IV. Market Outlook: Mixed Signals, Price Center Likely to Drift Narrowly Lower

Changes in propylene cost and supply-demand fundamentals remain the dominant pricing logic in September. On the cost side, international oil prices are expected to trend lower, weakening cost support for propylene. On the supply side, multiple units under maintenance—including Wanhua Penglai, Sierbang, Tianhong Chemical, and Liaoning Jinfah—are scheduled to restart, increasing expectations of incremental supply. On the demand side, units for octanol, acrylonitrile, PO, and phenol/acetone are expected to restart, with demand likely to improve marginally. However, the narrowing external procurement gap at integrated plants will constrain the market.

Taking costs and supply-demand fundamentals into account, Chempricehub predicts that domestic propylene prices will ease slightly in September, with the monthly average likely to hover around 8,500 yuan/mt.

There are many uncertain factors ahead. Industry players are advised to focus on the following:

1. Maintenance restarts and operating load changes at PDH, cracking, and MTO units;
2. Crude oil trends amid Middle East geopolitical disturbances and changes in cost transmission;
3. Profitability changes for propylene and downstream products, and the pace of rigid demand procurement downstream;
4. Import cargo arrivals, port flows, and changes in domestic inventories.