I. Market Dynamics

As of January 19th, the benchmark price of propylene, according to SunSirs, was 6,147.67 RMB/ton, a 7.52% increase compared to the beginning of the month (5,717.67 RMB/ton). After a rapid increase, the market entered a consolidation phase. Tightening supply and increasing demand were the main driving factors. The shutdown of two PDH plants in Qingdao and Yantai exacerbated the supply shortage, while increased external procurement of propylene by Wanhua Chemical and the restart of PP plants by Lihe and Jingbo jointly supported the overall strong buying sentiment.

II. Price Trend Forecasts

The short-term market is temporarily stable and consolidating within a range. After the rapid price increase, downstream buyers' ability to absorb the higher prices is being tested. Downstream profit margins have already been squeezed, which may dampen purchasing enthusiasm. There is a slight upward price expectation in the medium to long term.

Supply side: Under cost pressure, the operating enthusiasm of PDH plants is suppressed, and subsequent maintenance plans may provide support for supply.

Demand side: Before the Chinese New Year in February, there is stocking-up demand from downstream industries, which may provide temporary support. Purchasing activities from companies like Wanhua also provided a continuous highlight in demand.

Cost side: Prices of key raw materials (crude oil and propane) are expected to rise, which may strengthen cost support.

III. Key Risk Areas to Monitor

1. Downstream capacity to absorb price increases: The continuous rise in propylene prices will squeeze the profit margins of downstream products, potentially leading to insufficient demand in the future. This is the core constraint in the current market.

2. Supply recovery status: Pay attention to the progress of the resumption of operations at existing parking facilities, as well as the actual pace of deployment of new capacity (1.9 million tons planned for commissioning in the first quarter).

3. Cost-side fluctuations: The trends in international crude oil and propane prices will directly affect propylene prices through the cost channel.

Overall, the propylene market experienced a strong upward trend driven by unexpected supply contractions and increased external procurement by companies such as Wanhua. In the short term, prices may need to consolidate due to their current high levels, but in the medium term, there is still room for further slight increases supported by cost factors, pre-holiday stockpiling, and anticipated supply disruptions due to maintenance.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.