SunSirs: Propene Market Sees Sluggish Supply and Demand Ahead of Spring Festival

Entering February, Sinopec East China's propene listed price remained at 6,500 RMB/ton. During this period, Zhejiang's ex-tank quotes hovered around 6,500 RMB/ton, while Jiangsu's delivered prices referenced roughly 6,600-6,700 RMB/ton. Market conditions overall remained deadlocked and consolidated, with minimal fluctuations in spot market prices.

Currently, the East China propylene market fundamentals show a stalemate, with prices stuck in a range.

On the supply side, upstream feedstock prices strengthened, supporting propylene costs. Strong crude oil performance at month-end drove propane prices higher, with the CP value continuing to rise in February, increasing cost pressure for the propane dehydrogenation process route. Simultaneously, Iran's gas restriction policy caused a sharp drop in its methanol exports, leading to a rapid increase in international methanol prices. Some MTO units sourcing methanol externally faced cost inversion pressures, opting to reduce operations or shut down for maintenance. On the other hand, previously idled plants in the region have yet to announce restart schedules. Companies like Jiangsu Ruiheng and Nanjing Chengzhi also suspended spot sales before the holiday, maintaining tight propylene supply with limited spot market circulation. The convergence of cost pressures and constrained supply has dampened propylene producers' willingness to cut prices despite cost pressures, resulting in strong bottom support for market prices and overall resilience against declines.

On the demand side, while butanol and amyl alcohol remain profitable, most downstream products face weak profitability. As shown in the chart above, the weighted operating rate for propylene downstream products in 2026 is approximately 3 percentage points lower than the same period in 2025, indicating a weakening overall demand outlook for propylene downstream sectors. Current market demand remains subdued, with sparse new order transactions. Downstream users primarily execute long-term contracts, reflecting a strong wait-and-see attitude and generally lackluster trading activity.

In summary, the East China propylene market faces subdued supply and demand. Despite weak transactions, limited spot supply restricts downward pressure on quoted prices. Looking ahead, on the supply side, PDH shutdowns constrained by cost-profit pressures leave operating rates uncertain, suggesting continued tight supply. On the demand side, with the Spring Festival approaching, downstream end-users will gradually exit the market, resulting in modest demand support. Overall, with tight spot propylene supply in the market, the East China propylene market is expected to maintain subdued supply and demand conditions before the holiday, with prices likely to consolidate in a range-bound manner.

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