SunSirs: Amid the Dual Drivers of Geopolitical Factors and Resumption of Work, Abundant Positive Factores for Propylene Emerged

Futures and Spot Price Trends

spot price

At the beginning of the month, the price fluctuated around 6,300 RMB/ton. In the middle of the month, with the rise in crude oil costs and the strengthening of downstream resumption of work expectations, it gradually rebounded to above 6,400 RMB/ton. At the end of the month, it was reported at 6,411 RMB/ton (SunSirs benchmark price), an increase of about 1.8% compared with the beginning of the month. Overall, it showed a trend of first declining and then rising, with a slightly stronger range.

Main contract:

Following the upward trend in tandem with spot prices, it fluctuated around 6,300 RMB/ton at the beginning of the month, then surged rapidly in the middle of the month, ending at 6,470 RMB/ton, an increase of about 2.7% from the beginning of the month. The futures price was slightly higher than the spot price, reflecting a relatively optimistic market outlook for the short term.

Recent Contracts:

Volatility was more pronounced, with multiple rallies and pullbacks within the month. Overall, it followed the rhythm of the main contract, reflecting short-term capital speculation and sentiment changes.

Main Contract Basis Rate

Since February: The basis rate has fluctuated narrowly around the zero axis, mostly within the range of -2% to +3%. It rebounded to 2.59% and 1.96% on February 12 and 21 respectively, before turning negative again at the end of the month. The futures price was slightly higher than the spot price, indicating that the futures and spot prices were closely linked and the market had largely priced in the rising costs and expectations of resuming work.

Long-term average: As of February 27, 2026, the 180-day average basis rate for propylene was 2.73%, and the 90-day average basis rate was 2.49%. Thebasis rate was within a reasonable correction range and had not shown any extreme deviation.

Overall, the fluctuations in the propylene futures basis in February accurately reflected rising costs, changes in the supply and demand pattern, and the evolution of market expectations, providing an important reference for judging the futures-spot relationship and market trends.

Core Driver

1. Cost side: Continued geopolitical conflicts in the Middle East pushed Brent crude oil prices to a high of $83/barrel this month, an increase of approximately 4.2% from the beginning of the month. This increased propane feedstock costs, providing strong support for propylene prices.

2. Supply side: Domestic propylene plant operating rates remained at 78.44%, a slight decrease of 0.30% week-on-week. PDH plant maintenance continued, and the pace of new capacity release slowed. Market supply remained stable, with no concentrated supply pressure.

3. Demand side: The operating rates of downstream PP, octanol, and acrylonitrile increased by 3-5 percentage points month-on-month, and the resumption rate of packaging, film, and plastic weaving industries exceeded 85%. The demand for restocking for essential needs was gradually released, supporting spot transactions, and the downstream acceptance of high prices gradually recovered.

4. Futures Market: The average daily trading volume of the February propylene futures main contract increased by 12.3% month-on-month, and the open interest increased by 8.7% month-on-month. Funds showed increased preference for the chemical sector, and prices reflected positive expectations in advance, which pulled the spot market.

Market outlook

In the short term, the market is expected to maintain a range-bound, slightly bullish trend, with the core range estimated at 6,350–6,650 RMB/ton. Key factors to watch include: crude oil price movements, downstream resumption of operations, plant maintenance plans, and the pace of basis correction.

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