Propylene supply-demand gap continues to widen; price center is expected to shift downward in June.

【Introduction】 In May, the domestic propylene market remained at high levels due to cost support and fundamentals from supply and demand. The monthly average price in Shandong was 9,234 CNY/ton, up slightly by 0.04% month-on-month. Entering June, geopolitical positives are gradually fading. On the supply side, production resumption at plants is expected to increase supply. Although downstream sectors are also anticipated to resume operations in stages, the weak profitability pattern may see limited improvement, curbing overall demand recovery. The supply-demand basis is expected to widen further, putting pressure on the market, and sentiment is turning bearish. The monthly average price is likely to fluctuate around 9,100 CNY/ton.

I. Supply Side: Accelerated Plant Restarts, Loose Supply Pattern to Continue

Figure 1: 2025-2026 Domestic Propylene Output and Capacity Utilization Rate Trend (10,000 tons)

(Data source: chempricehub)

Table 1: Overview of Domestic PDH Plant Operating Status (Unit: 10,000 tons)

(Data source: chempricehub)

In May, the pace of resumption in the propylene industry gradually became apparent, and overall supply tended to loosen. The increase in supply became a key factor suppressing prices. Data shows that the domestic propylene capacity utilization rate in May was 66.9%, up 1.0 percentage point from the previous month. The operating rate is expected to further increase by 1.20 percentage points in June to 68.10%.

As the mainstream production process for propylene, the operating status of PDH units significantly impacts spot supply. Currently, 15 PDH units in China are shut down, involving a capacity of 7.66 million tons, leading to a reduction in daily supply of about 20,000 tons. In June, units such as Wanhua and Huahong are scheduled to restart, further boosting industry supply capacity. The monthly output is expected to reach 4.85 million tons.

It should be continuously noted that the geopolitical situation in the Middle East has not yet fully eased, and there remains uncertainty in the supply of propane feedstock. This may cause operational units to reduce loads or restarting units to delay restart, adding some variables to the supply side.

II. Demand Side: Divergent Downstream Operating Rates, Weak Rigid Demand Support

Figure 2: 2025-2026 Trend of Domestic Downstream Operating Rates

(Data source: chempricehub)

Looking at downstream operating performance, the overall operating rates of major propylene downstream industries weakened in May. Core units such as PP powder, propylene oxide (PO), octanol, and acrylic acid saw month-on-month declines, with octanol falling 13.0 percentage points and PO falling 7.1 percentage points. Only PP pellets and acrylonitrile showed slight increases, up 1.8 and 1.0 percentage points month-on-month respectively.

Looking ahead to June, the divergence in downstream operating rates is expected to continue. PP powder and acrylonitrile units are expected to see phased recovery, with month-on-month increases of 3.3 and 2.6 percentage points respectively. Meanwhile, PO, octanol, and acrylic acid are still expected to see declines, with octanol posting the largest drop of 11.0 percentage points month-on-month.

Overall, although some downstream units under maintenance will gradually resume, the downstream industries are weighed down by their own supply-demand patterns, and the improvement in profitability is limited. The stimulative effect on feedstock procurement is weak, and demand recovery remains suppressed. Procurement is still mainly rigid demand.

III. Supply-Demand Pattern: Widening Supply-Demand Gap, Weakening Fundamentals

Figure 3: 2025-2026 Monthly Propylene Supply-Demand Gap Trend (10,000 tons)

(Data source: chempricehub)

According to supply-demand data forecasts from chempricehub, the total domestic propylene supply in June is expected to be 4.95 million tons, with total demand of about 4.84 million tons. The supply-demand gap will further widen to 110,000 tons, and the market is gradually facing inventory accumulation pressure.

Considering the supply-demand pattern, the propylene market in June will remain loose. Spot supply continues to increase, and producers may face growing pressure to move goods, increasing their willingness to offer discounts. Demand recovery remains sluggish, with downstream procurement mainly for rigid needs. Buying interest is unlikely to see a significant uptick, continuing to weigh on propylene prices.

IV. Market Outlook: Bearish Sentiment Dominates, Price Center to Edge Lower in June

In summary, in June, the propylene market logic returns to fundamentals. Supply steadily recovers while demand fails to keep pace, and the supply-demand gap continues to widen. Combined with somewhat reduced cost support, the market overall will be weak.

It is expected that the domestic propylene price center will edge lower in June, with the monthly average price in Shandong likely to fluctuate around 9,100 CNY/ton.

With many disturbances in the current market, the subsequent trend remains uncertain. It is suggested that the industry focus on:

1. PDH and cracker restart, maintenance, and load adjustment dynamics.
2. Price trends of propane, crude oil, and other feedstocks, and cost transmission.
3. Downstream resumption pace, profitability changes, and rigid demand procurement strength.