1. Key Market Focus This Week
Supply: During the week, plants operated by Huatai, Sanyue, and South China gradually resumed normal operations, while Jinling and Ruiheng reduced production rates; other facilities remained stable. Total output for this period was 131,600 tons, an increase of 700 tons compared to the previous period. The capacity utilization rate stood at 70.26%, up by 0.36 percentage points from the previous period.
Costs: The weekly average comprehensive profit for propylene oxide produced via the chlorohydrin process was -594.89 RMB/ton, a decrease of 12.28% week-on-week. The theoretical profit for HPPO (Hydrogen Peroxide to Propylene Oxide) was -1100.74 RMB/ton, down by 4.60% week-on-week.
2. Weekly Market Analysis
This week, the domestic propylene oxide market initially rebounded from a low point before declining again. Following last week’s prolonged sideways trading, market sentiment cooled and transaction activity weakened. Prices fell towards the weekend, reaching recent lows. Subsequently, strong crude oil prices boosted downstream purchasing sentiment, leading to improved trading and inventory drawdown over the weekend. Suppliers quickly raised prices, but the increases were relatively significant. By the start of this week, raw materials such as propylene and liquid chlorine showed weak trends. Combined with a short-term increase in propylene oxide supply during the week, downstream buyers adopted a cautious stance and reduced procurement volumes. As gains were gradually given back throughout the week, today saw renewed optimism due to potential rebounds in raw material prices, improving market sentiment. As of Thursday, October 22, mainstream ex-factory cash prices in Shandong ranged from 11,100 to 11,300 RMB/ton.
During this period, propylene oxide operating rates increased: Plants operated by Huatai, Sanyue, and South China gradually returned to normal operation, while Jinling and Ruiheng reduced loads; others remained stable. On the cost side, propylene prices rebounded after falling, and liquid chlorine prices weakened and consolidated, indicating that representative processes are running at a loss. Regarding demand, there was a concentrated wave of orders received late last week, but the market subsequently returned to a quiet state. Today, market sentiment shows signs of stabilization, with inquiry activity picking up.
3. Outlook and Analysis for Propylene Oxide
Looking ahead, propylene prices are expected to see moderate rebounds, while liquid chlorine will likely continue to trend weakly, potentially providing stronger cost-side support. On the supply side, plants operated by Jinling and Wanhua Phase III are scheduled for shutdowns for maintenance, while other facilities remain stable, leading to a reduction in overall supply. In terms of downstream demand, some rigid demand is expected towards the end of the month, with further releases anticipated around key dates. Currently, support from both cost and supply sides appears to be strengthening, which may help stabilize the market. If propylene prices surge strongly, they could drive propylene oxide prices higher accordingly. However, the sustainability of downstream demand will determine the extent of price movement, suggesting that the market may experience narrow-range fluctuations amid ongoing bargaining dynamics.
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