Lead: In August, the domestic propylene oxide (PO) market largely followed an "M"-shaped trajectory, stabilizing and turning upward toward the end of the month. During the month, cost-side propylene support and supply fluctuations alternately dominated the market. Monthly maintenance-related production losses remained at a relatively high level of around 220,000 tons, while downstream purchasing adjusted in line with price movements. Prices fluctuated within a high range of 9,000–10,000 yuan/ton throughout the month. September brings multiple variable factors, with key attention needed on the realization of planned plant restarts.
Supply: Maintenance losses remain high; incremental supply realization delayed
On the supply side, the average capacity utilization rate of domestic PO plants in the first half of August stood at 61.88%, before falling by 2.99 percentage points to 58.89% in the second half. Wanhua implemented rotating output reductions, individual chlorohydrin process units saw operational adjustments, and cost pressure limited any effective incremental supply. As a result, the overall supply chain returned to the low end of the year-to-date range. Spot supply in East China was particularly limited, underpinning relatively firm market prices.
Looking ahead, Lianhong's 300,000 t/yr CHP unit is restarting. In September, Qixiang, Satellite, and Shenghong may also restart sequentially. However, given cost pressures, attention should be paid to the actual timeline of implementation, as delays remain possible.
Demand: Passive procurement; just-in-time demand released at month-end
On the demand side, downstream performance was relatively weak in the first half of the month. Some end users reduced operating rates due to high-temperature holidays, and acceptance of high-priced feedstock was limited. Because downstream transmission was not smooth, the market saw a sideways phase and then a decline after earlier reaching the 10,000 yuan/ton high. However, given the earlier persistent weakness and expectations of new PO supply, downstream and end-user inventories remained low. Approaching month-end, after waiting for a stage low, buying gradually increased.
Looking ahead, just-in-time demand was released at the end of August. But with expectations of significant incremental PO supply in September, downstream players generally have no stocking intention. After the immediate demand phase, they are likely to return to cautious purchasing, limiting market sustainability and potentially capping the PO uptrend.
Cost: Crude oil fluctuations affect sentiment; persistently high propylene supports the market
In mid-to-late August, supported by their own supply-demand fundamentals, domestic propylene prices were relatively strong, essentially fluctuating within a range of 8,500–9,000 yuan/ton and showing solid resilience. The PO-propylene spread adjusted within a range of 300–1,500 yuan/ton, still providing strong bottom-end support for PO. As of August 25, the Shandong propylene price reached 8,920 yuan/ton, and the PO-propylene spread narrowed to 380 yuan/ton. PO producers signaled an intention to keep prices stable, as representative production processes were running at a loss.
In the short term, with crude oil adjustments, cost-side support from propylene is limited. Combined with cautious downstream buying sentiment, producers are increasingly willing to cut prices to move goods, leaving some room for further downside. Liquid chlorine prices have also fallen, and cost support has weakened compared with earlier in the month. For September, however, propylene is still expected to remain in a relatively high range, so the realization of incremental PO supply warrants close monitoring.
Outlook: Stabilizing rebound at month-end; September to test supply increment realization
In the near term, PO prices have stabilized: 9,000 yuan/ton ex-works cash in Shandong and 9,650 yuan/ton delivered cash in East China. Downstream players, observing limited cost support and modest supply increments, have begun releasing month-end just-in-time demand. With a relatively wide north-south price gap, new-order offers in Shandong have ticked upward. However, terminal demand sustainability is expected to be limited, capping further upside.
In September, the traditional peak season may bring a moderate demand rebound. But with numerous planned PO supply increments and uncertainties surrounding high propylene prices, market sentiment is divided. The trading range is expected to continue narrowing. If all planned increments are realized smoothly, the monthly average price could decline slightly from August. This remains a key point to watch.
Chempricehub sincerely invites industry colleagues to gather in Ningbo, Zhejiang on September 8, 2026, for an in-depth analysis of upstream and downstream restructuring and breakthroughs in the propylene oxide industry chain. The event will focus on hot industry topics, feature authoritative expert insights, and showcase the latest industry data releases.
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