Price trend
Recently, the East China propylene market has shown a clear upward trend after the New Year holiday. After a brief adjustment, market prices steadily increased, driven by favorable supply and demand fundamentals. As of January 12th, SunSirs' benchmark price for propylene was 5,871.00 RMB/ton, a 2.68% increase compared to the beginning of the month (5,717.67 RMB/ton).
Market mainstream prices have shown a significant rebound compared to before the holiday. This upward trend is mainly due to sustained cost pressures, positive news on the supply side, and the temporary boost from restocking demand after the holiday. The spot market is showing signs of tightening supply, and prices may still have some upward potential in the short term.
I. Market Overview: Prices are trending upwards, and regional price differences are significant.
Currently, the overall sentiment in the East China propylene market is strong. Specifically, Sinopec East China's listed price remains stable at 5,950 RMB/ton, serving as an important benchmark for the market. In terms of actual transactions, there are some price differences between regions: delivered prices in Jiangsu province are higher, ranging from approximately 6,200-6,250 RMB/ton; while ex-tank prices in Zhejiang province are relatively lower, ranging from approximately 5,950-6,000 RMB/ton. This regional price difference reflects the varying degrees of local supply and demand tightness and logistics costs. Overall, market buyers are generally accepting of current prices, with trading activity mainly driven by essential needs and cautious inventory replenishment.
II. Core Drivers of the Price Increase: The Triple Play of Costs, Supply, and Demand
This round of price increases is not due to a single factor, but rather the result of a confluence of factors including costs, supply, and demand.
Cost side:
This forms a solid bottom support. The price of methanol, the main raw material, continues to rise. As of January 12th, SunSirs' benchmark price for methanol was 2,265.83 RMB/ton, a 2.64% increase compared to the beginning of the month (2,207.50 RMB/ton). The theoretical profit of the methanol-to-propylene process is in deep deficit, and the extent of the loss is still expanding.
High production costs have significantly strengthened manufacturers' willingness to maintain high prices, providing solid support for the market. At the same time, the continuous upward trend in propylene prices in the Shandong region, which serves as a market indicator, has also positively influenced the sentiment of market participants in East China, leading to a linked price increase across the regions.
Supply side:
The tight supply-demand balance is the key factor driving up prices. Recently, market supply has been squeezed by both domestic plant disruptions and reduced imports.
Domestically, the restart date for Ningbo Jinfa's Phase 1 PDH plant remains undetermined. Nanjing Chengzhi's MTO and Shenghong's PDH plants began operating at reduced capacity at the beginning of the month. Furthermore, the restart of Ningbo Fude's MTO plant has been postponed until late January, and some companies plan to conduct maintenance in February, resulting in a significant contraction in regional supply.
Regarding imports, due to reduced production at upstream facilities in Japan and South Korea, the supply of propylene arriving at East China ports has decreased accordingly. The simultaneous tightening of both domestic and international supply has reinforced market expectations of future supply shortages, leading to strong reluctance among holders to sell, further exacerbating the tight situation in the spot market.
Demand side:
This provided temporary support. Following the holiday, downstream factories typically restock their inventories, leading to a significant increase in market demand. Simultaneously, prices of major downstream products such as polypropylene, n-butanol, and octanol also rebounded, which to some extent improved the profitability of downstream industries. This increased their tolerance and acceptance of rising propylene prices, making the cost transmission process relatively smooth in the short term.
On January 12th, the benchmark price of PP (filament grade) according to SunSirs was 6,376.67 RMB/ton, an increase of 3.35% compared to the beginning of the month (6,170.00 RMB/ton).
On January 12th, the benchmark price of n-butanol (industrial grade) according to SunSirs was 5,773.33 RMB/ton, an increase of 2.49% compared to the beginning of the month (5,633.33 RMB/ton).
On January 12th, the benchmark price of isooctanol, according to SunSirs, was 6,983.33 RMB/ton, an increase of 0.96% compared to the beginning of the month (6,916.67 RMB/ton).
III. Market Outlook: Support and resistance levels coexist, and upward potential is accompanied by risks
Looking ahead to the short-term market, propylene prices are expected to remain relatively strong but will also be constrained in their upward movement.
The support mainly comes from the tight supply situation in the spot market, which is unlikely to ease in the short term, coupled with concentrated plant maintenance and limited imports. These factors, along with high production costs providing a price floor, suggest that prices have room to rise.
However, upward pressure is also accumulating. Firstly, high prices may erode downstream profits; if major downstream industries fall into losses, it will trigger resistance and slow down procurement, thereby curbing the price increase. Secondly, cost support may weaken; international crude oil faces expectations of oversupply, and if the prices of raw materials such as propane fall, the supporting logic will be weakened.
Overall, tight supply and high costs continue to dominate the market in the near term, but rising prices will gradually trigger negative feedback from the demand side. The extent and sustainability of future price movements will depend heavily on changes in downstream profits and the actual purchasing power of buyers. Close attention should be paid to key indicators such as plant operations, downstream operating rates, and profit margins.
If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.
