Lead-in: This cycle, despite expectations of increased supply, downstream sectors experienced a new phase of profit recovery, boosting their willingness to restock on dips and driving propylene prices up again. As of April 21, the mainstream average price of propylene in Shandong was 9,300 yuan/ton, up 3.62% from April 17. In the short term, with good cost-side support and underlying demand providing a floor, prices have room for further upward movement. The mainstream average may climb to a high of 9,400-9,500 yuan/ton. However, caution is warranted as increased downstream costs and a potential slowdown in buying momentum could limit further upside.

Key Focus for the Future:

1. The implementation schedule and actual output changes from the load adjustment of Weiyuan Chemical's propylene unit and the restart of Wanhua Chemical's Yantai PDH unit.
2. The evolution of the geopolitical situation in the Middle East (particularly the shipping conditions in the Strait of Hormuz) and fluctuations in international crude oil prices.

I. Supply Side: PDH Operating Fluctuations Dominate, Supply Increase Expectations Strengthen

As shown in the data, operational fluctuations of propylene units in Shandong increased this cycle. Although the propylene units at Weiyuan Chemical and Hualian Petrochemical have completed restarts, the shutdown of Qingdao Jinneng's 900 kt/year PDH unit led to a weekly regional output drop to 199 kt, down 3.21% week-on-week. The average industry operating rate fell to 55.64%, indicating the overall supply situation remains tight.

Looking ahead, the Weiyuan PDH unit in the region has restarted, and its load is expected to gradually increase. Meanwhile, Wanhua Chemical's 750 kt/year PDH unit also has restart expectations, making supply-side increases relatively clear. It is estimated that during the period from April 20 to 26, Shandong's weekly propylene output will rebound to 209.4 kt, an increase of 5.25% compared to the previous cycle.

II. Demand Side: Downstream Unit Fluctuations Also Exist, Weakening Profits May Become a Constraint

From a profitability perspective, as raw material propylene prices rose again, the profit margins for major downstream derivatives narrowed significantly. Compared to the last trading day of the previous week (April 17), PP powder profits fell by 340%, propylene oxide (PO) by 122%, acrylonitrile by 49%, and 2-ethylhexanol (辛醇) by 27%. Looking forward, if propylene prices continue to rise, they will further compress downstream product profits, potentially affecting unit operating rates and subsequently dampening the enthusiasm for procuring raw material propylene, thus imposing constraints on prices.

From the perspective of unit operations, fluctuations in mainstream downstream units in Shandong increased overall this cycle. Although some PP and PO units have resumed production, most units remain shut down, resulting in limited overall recovery in operations. Looking ahead, units such as those at Lanfan Chemical, Jincheng Petrochemical, and Dongming Dongfang have restart expectations, which will provide some support to local demand. However, the planned shutdown of the acrylonitrile unit at Dongying Color will partially offset demand-side factors. Considering the combined impact, the theoretical downstream demand in the region is expected to decrease by 13.1 kt week-on-week.

III. The Propylene-PP Spread Remains Consistently Narrow, Limiting Demand from Such Plants

As shown in the chart, the spread between the main downstream product PP powder and propylene has long been maintained within a narrow range. The average operating rate of PP powder plants in Shandong has fallen to 10%, with most enterprises shut down. Concurrently, some integrated propylene enterprises continue to release material into the market, further increasing market circulation. If the current weak spread pattern persists, it may force operating units to further reduce loads or even shut down, exacerbating market supply pressure and continuously suppressing downstream purchasing willingness.

IV. Trend Outlook: Short-term Upside Momentum Slows, Medium-to-Long Term Maintains Range-Bound Fluctuations

(I) Short-term Trend: Upside Momentum Slows
In the short term, with good cost-side support and underlying demand providing a floor, prices have room for further upward movement. The mainstream average may climb to a high of 9,400-9,500 yuan/ton. However, considering recent spot market volatility characteristics and subsequent demand feedback, the upside is expected to be limited, with prices prone to pullbacks at high levels. Focus will be on the load release from Wanhua and Weiyuan units.

(II) Medium-to-Long Term Market: Range-Bound Fluctuations Remain the Main Trend
In the medium to long term, uncertainty remains regarding geopolitical developments. However, with supply-side increases continuing as units operate at full capacity, and demand-side recovery constrained by narrowing profits and weak spreads, the market is expected to maintain a predominantly volatile and downward trend. Prices are forecasted to range between 8,900 and 9,500 yuan/ton.