SunSirs: The Propylene Market Was Trading Smoothly, and Prices Are Expected to Continue Rising

Price Trend:

After New Year's Day, propylene prices did show a trend of stabilizing after falling and then slightly increasing. In the short term, there is momentum for further increases, but the overall expected increase is limited. As of January 7th, the benchmark price of propylene according to SunSirs was 5,797.67 RMB/ton, an increase of 1.40% compared to the beginning of the month (5,717.67 RMB/ton).

Supply side:

Some PDH (propane dehydrogenation) plants were planning maintenance due to cost pressures, which may reduce supply. Inventories at companies in the Shandong region were low, and shipments were proceeding smoothly.

Demand side:

There was new downstream capacity in the northern market. Entering February, pre-holiday stockpiling might lead to a temporary increase in demand. The overall market was oversupplied, and the propylene industry was in an expansion cycle, making it difficult to fundamentally reverse the loose supply-demand balance in the short term.

Downstream demand provided limited support, and major downstream polypropylene producers faced significant cost pressure, leading to the shutdown of some facilities. As of January 7th, SunSirs' benchmark price for PP (filament grade) was 6,253.33 RMB/ton, a 1.35% increase compared to the beginning of the month (6,170.00 RMB/ton). This provided some support for propylene demand. The sustainability of the post-New Year's Day price increase remains to be seen, and depends critically on the downstream market's acceptance capacity.

Propylene oxide (PO): Profitability was relatively good (theoretical gross profit exceeded 1,500 RMB/ton on January 2nd), operating rates remained high, and demand was stable. As of January 7th, SunSirs' benchmark price for propylene oxide was 7,816.67 RMB/ton, an increase of 1.08% compared to the beginning of the month (7,733.33 RMB/ton).

Cost Perspective:

The core contradiction in the cost structure was the conflict between the "low prices" of raw materials such as oil and propane and the "deep losses" incurred by the PDH process. This resulted in downward pressure on cost support, but also upward momentum due to supply contraction.

Price Outlook

January market average price forecast: approximately 5,800 RMB/ton. Key resistance level: 5,850 RMB/ton (a crucial point to watch during this upward trend). Overall assessment for the first quarter: a slight upward shift in price is likely, but a strong, unilateral price increase is not expected.

Overall, the current market is characterized by a combination of short-term rebound and long-term downward pressure:

Short-term opportunities: Tight supply (low inventory, expected maintenance) and seasonal demand (stockpiling before holidays) are the main drivers of price increases. Pay attention to whether the price can effectively break through the 5,850 RMB/ton mark.

Long-term pressure: The industry structure of oversupply is the fundamental constraint. Although 1.9 million tons of new capacity will be planned to come online in the first quarter, this mainly affected East and South China, with limited direct impact on the main market in Shandong.

Key variables: Close attention should be paid to the impact of international oil price trends on costs, as well as the profitability and operating rates of downstream industries such as polypropylene, as these factors determine the sustainability of the price increase.

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