SunSirs: The Domestic Propylene Oxide Market Saw Prices Rise Sharply Before Falling Back Last Week (June 15-18)

Price trend

Last week, the domestic propylene oxide market saw prices rise before falling back. According to the SunSirs monitoring system, the benchmark price for propylene oxide stood at 8,500.00 RMB/ton as of June 18, representing a 12.37% decline compared to the beginning of the month (9,700.00 RMB/ton).

Market analysis

On the feedstock side, propylene prices continued to weaken this week; on June 18, the propylene market in Shandong fell to 7,934.33 RMB/ton, a sharp drop of 426.67 RMB/ton from the previous day. The further weakening of support from the feedstock side is a key factor dragging down propylene oxide prices. According to the SunSirs monitoring system, the benchmark price for propylene stood at 7,934.33 RMB/ton as of June 18, representing a 13.14% decline compared to the beginning of the month (9,134.33 RMB/ton).

Supply side: Earlier concentrated maintenance had temporarily pushed the industry's capacity utilization rate down to 59.58%. However, by mid-month, the restart of Wanhua’s Phase IV PO/CHP unit meant the supply-side support from maintenance outages began to wane. Capacity utilization has since rebounded to over 63%; while suppliers have increased shipment volumes, the scale of this rise is limited, and inventory pressure has not yet been effectively alleviated.

Demand side: June is exhibiting the typical characteristics of a traditional off-season. The operating rate for the largest downstream sector—polyether polyols—stands at only around 52.56%; end-users are taking longer to destock, and the flow of new orders remains sluggish. With prices for polyether polyols continuing to trade below the cost of propylene oxide (an inverted price relationship), downstream purchasing strategies have shifted to small-volume, on-demand restocking.

Market Outlook:

Analysts at SunSirs believe that the propylene oxide market is likely to continue its pattern of weak fluctuation in the short term; whether prices stabilize will depend largely on the price trends of the raw material propylene and developments regarding plant maintenance.

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