SunSirs: Propylene Oxide Prices Have Surged Dramatically Over the Past Month

Since early March 2026, propylene oxide has experienced a rapid price surge. Driven by a confluence of factors—including rising raw material costs, concentrated plant maintenance, and the withdrawal of overseas capacity—prices have risen significantly. Based on SunSirs’ benchmark price as of April 13 and comparative data from early April, this analysis systematically examines the logic behind this price movement, the supply-demand dynamics, and future market trends.

I. Key Price Trends and Rationale Behind the Fluctuations

As of April 13, the SunSirs propylene oxide benchmark price stood at 13,350 RMB/ton, up 550 RMB/ton from 12,800 RMB/ton at the beginning of April, representing a 4.3% increase; Compared to 7,985 RMB/ton at the beginning of March, the price has risen by 5,365 RMB/ton, representing a 67.2% increase—effectively doubling in just over a month.

Cost Side: Soaring Propylene Prices Provide Strong Cost Support

Propylene accounts for 60%–70% of the cost of propylene oxide production, making it the primary driver of this round of price increases. According to SunSirs data, the benchmark price of propylene on April 13 was 9,020 RMB/ton, up 4.3% from 8,650 RMB/ton at the beginning of April and up over 40% from 6,400 RMB/ton at the end of February. Geopolitical tensions in the Middle East have kept crude oil prices elevated, leading to tight propylene supply and sustained price increases. This has directly driven up propylene oxide production costs, prompting strong resistance to price cuts among manufacturers.

Supply Side: Domestic and International Plant Shutdowns, Spot Market Shortages

Domestically, multiple major production units in Shandong and East China are undergoing concentrated maintenance, with core capacity operating at reduced loads. Industry operating rates remain low, and spot market supply is scarce. Globally, Europe and the United States shut down over 1 million tons of propylene oxide capacity last year, making China the primary global supplier. The overseas supply gap further supports the upward trend in domestic prices.

Demand Side: Supported by Downstream Essential Demand, Boosted by Export Stockpiling

Polyether polyols constitute the primary downstream application for propylene oxide, accounting for approximately 78% of total demand. The Business Society’s benchmark price for polyether polyols stands at RMB13,800 per ton, up 3.8% from the beginning of the month. These products are mainly used in polyurethane flexible and rigid foams, elastomers, and other sectors, where demand is relatively inelastic. Additionally, adjustments to the export tax rebate policy for polyethers effective April 1 prompted downstream enterprises to rush to stockpile in advance, further driving up procurement demand for propylene oxide. Although downstream buyers currently show some resistance to high prices, inventories remain at low levels, and domestic restocking continues to support prices.

II. Industry Chain Transmission and Profitability Landscape

The sharp surge in upstream propylene prices has rapidly passed cost pressures down to the propylene oxide segment, widening the price spread between the product and raw materials from less than 2,000 RMB/ton to over 4,000 RMB/ton, significantly restoring the industry’s profit margins. Midstream propylene oxide producers are maintaining high production rates, with inventories remaining at low levels and no pressure for market stockpiling. Downstream products such as polyether and propylene glycol have followed suit with price increases, and cost pass-through has been generally smooth. However, cost pressures on small and medium-sized enterprises have intensified, leading them to focus on small, essential-need orders.

III. Market Outlook: High-Level Volatility with Limited Correction Potential

In the short term, the propylene oxide market is expected to continue fluctuating at high levels, with prices more likely to rise than fall. On the cost side, high propylene prices provide strong support; on the supply side, the trend of domestic and international plant capacity reductions persists, leading to continued tight spot supply; on the demand side, stable downstream essential demand and export stockpiling needs continue to provide support.

In the medium term, two key variables warrant attention: first, the trend of propylene prices; if raw material prices decline, cost support will weaken; second, the strength of downstream demand; if persistently high prices continue to suppress purchasing demand, prices may enter a consolidation phase at elevated levels. Overall, the near-term downside potential for propylene oxide prices is limited, and prices are expected to remain at relatively high levels. Future trends will depend on fluctuations in raw material prices and the progress of plant resumption.

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