Price trend

According to data analysis from SunSirs, as of December 9th, the benchmark price of propylene was 6,223.25 RMB/ton, a 0.69% increase compared to the beginning of the month (6，180.75 RMB/ton). Although the price increased, the core downstream demand remained weak, resulting in a lack of momentum for further price increases.

Supply side:

The overall industry operating rate remained at around 74%. There was an expectation of restarts at PDH (propane dehydrogenation) plants such as those of Dongguan Juzhengyuan and Shandong Binhua, which could lead to an increase in supply.

Demand Side:

Polypropylene: As the largest consumer of propylene, the PP industry was experiencing significant production losses and voluntary production cuts. As of the second week of December, industry production profits remained in a deep loss range of around -300 RMB/ton. As a result, the operating rate had fallen to a low of 40% - 42%. As of December 9th, the SunSirs' benchmark price for PP (filament grade) was 6,330.00 RMB/ton, a decrease of 0.52% compared to the beginning of the month (6,363.33 RMB/ton).

Propylene oxide (PO): Although industry profits had recovered slightly from losses, the rigid procurement strategy for raw material propylene made it difficult to generate sustained restocking demand. As of December 9th, the SunSirs' benchmark price for propylene oxide was 8,166.67 RMB/ton, a 2.94% increase compared to the beginning of the month (7,933.33 RMB/ton).

Acrylic acid: Industry operating rates and profits remained relatively stable, providing fundamental support for propylene demand. However, due to the limited total demand and growth potential of acrylic acid itself, it cannot offset the decline in demand for PP powder. As of December 9th, the SunSirs' benchmark price for acrylic acid was 6,066.67 RMB/ton, a decrease of 0.27% compared to the beginning of the month (6,083.33 RMB/ton).

Vinyl cyanide (AN): The industry was exhibiting an unsustainable state of "high operating rates and high losses." As of December 9, the operating rate of around 81% was accompanied by cash flow losses exceeding 500 RMB/ton. This high operating rate was primarily driven by market share and cash flow considerations, but it had become a significant potential risk for downstream demand.  There was a possibility of concentrated maintenance shutdowns in the future due to escalating losses. As of December 9th, the SunSirs' benchmark price for vinyl cyanide was 7,833.33 RMB/ton, a decrease of 0.84% compared to the beginning of the month (7,900.00 RMB/ton).

Cost side

International oil prices were trending towards volatility, and the pressure of oversupply in the medium and long term remains, providing insufficient cost support for propylene. Propane prices were relatively firm, leading to continued losses for the PDH (propane dehydrogenation) process route, but this had not yet triggered large-scale maintenance and production cuts.

Market Outlook

In summary, the core logic of the propylene market lay in a rebalancing driven by shrinking demand. Widespread losses and low profit margins in downstream industries had led to reduced operating rates, negatively impacting demand for raw materials. Until there is a significant recovery in end-consumer demand and effective destocking of downstream products, propylene prices are expected to remain volatile at low levels, with limited upside potential due to persistent constraints from the demand side. Key indicators for a market turnaround include the profit recovery process in the polypropylene powder industry and whether supply contractions occur in industries such as vinyl cyanide due to cash flow pressures.

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