Lead-in: Entering August, domestic propylene oxide (PO) market prices have remained elevated above RMB 9,000/ton (Shandong cash ex-works basis). Although supply-side incremental additions are expected, they are currently dispersed across different time points and partly offset by scheduled maintenance turnarounds. Market commodity volume growth is limited, providing firm price support. With cost-side fluctuations and adjustments, short-term prices are running relatively firm.
Supply: Slow incremental release; market remains relatively tight
Table: Comparison of domestic PO daily output and capacity utilization
| Jul 29 | Aug 5 | Change | Period-over-period | |
|---|---|---|---|---|
| Daily output (10,000 t) | 1.54 | 1.73 | 0.19 | 12.34% |
| Daily capacity utilization | 57.63% | 64.62% | 6.99% | / |
| Commodity volume (10,000 t) | 0.78 | 0.85 | 0.07 | 8.97% |
Data source: Chempricehub
On the supply side, July PO output totaled 503,000 tons with a capacity utilization rate of 60.61%, the lowest level in recent years. Entering August, the Wanhua and Ruiheng units have restarted, but neither has yet reached full load. Wanhua still has supply gaps, Ruiheng is selling limited volumes externally, and other producers have raised operating rates to varying degrees. As of August 5, domestic daily output increased by 1,900 tons to 17,300 tons, but commodity volume rose by only 700 tons—less than half of the output increase.
Looking ahead, Satellite's 400,000 t/y HPPO unit is tentatively scheduled for a maintenance shutdown on August 10; Lianhong New Material's 300,000 t/y CHP unit may restart around mid-month; Tianjin Bohua's 200,000 t/y POSM unit is tentatively set for maintenance on August 20; and toward month-end, attention will focus on whether Qixiang's 300,000 t/y HPPO unit has a restart plan. Overall unit activity is volatile, with startups and shutdowns offsetting each other, and actual incremental supply growth remains relatively slow. August output is expected at 525,000 tons—still on the low side—which is expected to provide sustained price support, especially in the first half of the month.
Demand: Limited end-use feedback; passive follow-through buying
On the demand side, recent new-order feedback for most downstream products has been limited. Polyether operating loads are hovering narrowly around 52%. Downstream buyers are mainly making passive follow-through purchases while watching PO prices strengthen. Some end-use plants are on summer heat-related holidays, and with crude oil volatility also under watch, market sentiment remains cautious, so overall follow-through buying is limited for now.
Looking ahead, downstream buyers will procure on a rigid-demand basis, but with no clear improvement in end-use demand, some resistance to high prices may emerge, capping PO price gains.
Costs: Crude oil swings affect sentiment; propylene expected to stay elevated
Crude oil has been relatively volatile. The main feedstock propylene has continued to climb, supported by tighter spot supply. Downstream plants are buying on an as-needed basis, and premiums on actual transactions persist. As of August 5, the Shandong propylene price reached RMB 8,025/ton. Liquid chlorine prices also rebounded after a weekend decline. With both feedstocks currently firm, cost support has strengthened somewhat.
Looking ahead, ups and downs in crude oil will continue to influence market sentiment, but propylene is currently driven mainly by supply-demand fundamentals, providing firm near-term support.
Outlook: Firm supply support; demand to cap further gains
In the near term, once PO prices reach RMB 9,500/ton (Shandong cash ex-works), further gains may be capped by demand-side constraints. A brief consolidation or pullback is possible, but the overall market should remain firm while awaiting fresh guidance.
Starting from mid-August, market fluctuations from unit startups and shutdowns will increase, and developments at specific time points warrant attention. With incremental supply release relatively slow, supply-side pressure is expected to remain largely manageable. After the summer heat holidays, actual follow-through from end-use customers and its implementation will also need to be monitored.
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