Price trends

The domestic propylene oxide market retreated from high levels this week. According to the SunSirs monitoring system, the benchmark price for propylene oxide stood at 9,066.67 RMB/ton as of August 12, marking a 1.45% decline compared to the beginning of the month.

Analysis of driving factors

On the raw material front, cost-side support has strengthened. International oil prices trended upward this week amidst volatility driven by geopolitical factors, and the price of the feedstock propylene continued to rise, closing at 8,340 RMB/ton on August 11—an increase of 150 RMB/ton from the previous day. However, the propylene oxide industry remains in a loss-making position; the average weekly comprehensive profit for the chlorohydrin process stood at -357.44 RMB/ton, reflecting a "double squeeze" caused by high costs and declining selling prices. According to the SunSirs monitoring system, the benchmark price for propylene was 8,251.00 RMB/ton as of August 12, marking a 4.08% increase compared to the beginning of the month (7,927.67 RMB/ton).

Supply side: Plant operations have seen frequent fluctuations. Multiple units—including Zhenhai Phase II, Guo'en, Yida, Qixiang, Lianhong, and Satellite—are currently shut down; as of August 11, the domestic capacity utilization rate for propylene oxide stood at just 60.25%. While Tianjin Petrochemical recently made a modest increase in operating rates, and both Ruiheng and Wanhua restarted units at low loads, the release of additional supply has been slow and staggered, resulting in limited growth in the volume of marketable product.

Demand side: Ineffective price transmission to downstream sectors was the primary factor behind this week's price pullback. The polyether market is currently in a transitional phase between the off-season and peak season; although earlier supply-side factors regarding the feedstock propylene oxide drove prices up, the resulting high price levels dampened downstream purchasing enthusiasm. With downstream buyers reducing intake and resisting high prices, trading activity remained subdued.

Market Outlook

In the short term, the relatively strong performance of the feedstock propylene continues to provide cost support; however, sluggish downstream demand and lingering resistance to high prices suggest the market may maintain a trend of stabilizing and consolidating. Key factors to monitor include plant maintenance schedules and shifts in the pace of downstream purchasing.

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