SunSirs: Propylene Market Pulled Back from Highs

Recent Key Performance of Propylene Prices

Recently, the propylene market has exhibited a pattern of surging initially before retreating, followed by weak consolidation. As of May 19, the benchmark price for propylene—as tracked by SunSirs—stood at 9,214.33 RMB/ton; this represents a decline of 2.95% compared to the beginning of the month (9,494.33 RMB/ton). Over the course of the week, daily prices peaked at 9,297.67 RMB/ton and bottomed out at 9,214.33 RMB/ton, resulting in an overall weekly fluctuation range of 1%.

Key Drivers:

1. Supply Side: The most significant bearish factor currently affecting the propylene market stems from a sustained increase in supply. Refineries and PDH (Propane Dehydrogenation) units—which had previously undergone concentrated maintenance—are gradually restarting operations. Consequently, the industry-wide operating rate is steadily recovering, and market supply volumes are progressively expanding, directly capping the upside potential for prices.

2. Demand Side: Downstream sectors—specifically producers of major products such as polypropylene, propylene oxide, and butanol/octanol—are facing limited profit margins. As a result, their procurement of propylene feedstock is driven primarily by immediate, essential needs, lacking the sustained momentum for inventory stockpiling or chasing price rallies.

During the recent price correction in the propylene market, downstream buyers showed no significant increase in their willingness to take delivery. Market transactions were dominated by small-volume purchases driven by immediate, essential needs; the absence of substantial buying support prevented prices from staging an effective rebound, leaving them to drift within a pattern of weak consolidation.

Market Outlook:

In the short term, the pattern of weak consolidation in the propylene market is expected to persist.

From a fundamental perspective, the logic of increasing supply remains intact, while demand is unlikely to experience any unexpected surges. Lacking strong market support, the center of gravity for prices will most likely continue to drift slowly downward, testing the support level around 9,000 RMB/ton.

From a medium-to-long-term perspective, the fundamentals of the propylene market have not entirely deteriorated:

Prices remain within a high range on a one-year horizon, and overall industry profitability remains satisfactory. Should future supply growth fall short of expectations, or if downstream demand experiences a seasonal rebound, the market retains the potential for a corrective rally.

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