Propylene prices fall, downstream continues to decline

Since 2020, the center of gravity of propylene prices has dropped significantly, and major downstream markets have also continued to decline. For the downstream, when costs and revenue go down at the same time, how the profit level changes depends on the comparison of the changes in cost and revenue. From the perspective of the first quarter, the main downstream of propylene is in a profitable state as a whole, but some of the downstream are in a loss situation during certain periods of time.

The sentiment of the parade is obviously different in different times, and the amplitude of the downstream is different

Since 2020, the center of gravity of propylene prices has continued to fall, and the main downswings have also shown a synchronous downward trend. As can be seen from Figure 1, the prices of major downstream products such as PP powder, propylene oxide, n-butanol, and octanol have continued to fall and fluctuate. There are many reasons for the decline in downstream prices. The decline in raw material propylene prices has led to a reduction in cost support, and public health events have caused downstream demand and blocked transportation. These are the most important factors.

At the end of March, the prices of propylene and major downstream products both fell significantly compared with the beginning of January. Among them, propylene, propylene oxide, n-butanol and octanol all declined by more than 20%, and PP powder decreased slightly, but also reached 17.57%. The center of gravity of the upstream and downstream prices dropped simultaneously, which can reflect the relatively sluggish overall market of the propylene industry in the first quarter.

Judging from the comparison of the average monthly prices of propylene and major downstream products, the monthly average prices in the first quarter both showed a continuous downward trend, and the average prices in the first quarter fell significantly year-on-year and quarter-on-quarter. This shows that the current relatively low prices of propylene and major downstream prices are more reflective of the overall downturn in the industry.

Different downstream gross profit situation is different, the overall decline is larger.

Judging from the different downstream gross profit situation, the overall gross profit situation in the first quarter showed a downward trend, indicating that the industry's profitability is also declining synchronously when the market continues to decline. This has a particularly great impact on industry participants.

In the main downstream of propylene at the end of March, PP powder and propylene oxide remained profitable, while n-butanol and octanol were at a loss. From the comparison of gross profit at the end of March and the beginning of January, the gross profit of PP powder has increased significantly, while the gross profit of propylene oxide, n-butanol and octanol has dropped significantly. This is consistent with the situation shown in Table 1. The price of PP powder fell by less than propylene, while the other downstream fell by more than propylene, resulting in different changes in gross profit.

Judging from the average monthly gross profit, the average gross profit of most downstream in March is significantly lower than that of January, except for PP powder. Judging from the average gross profit in the first quarter, the average gross profit in the first quarter of the main downstream is all positive, and the gross profit of propylene oxide is relatively high. However, the average gross profit in the first quarter declined significantly year-on-year and quarter-on-quarter, consistent with the average price trend in the second quarter of the table. From this point of view, the overall industry is facing greater profit pressure, and how to maintain profitability will become the focus of the market later.

Later stage propylene and next march will continue to decline, and how profit changes remain the focus.

Once the prices of raw materials such as crude oil and propane have dropped to a low level, and will continue to oscillate at a low level, the propylene cost support is obviously insufficient, coupled with the impact of factors such as increased supply and weak demand. From the downstream situation, the continued decline in raw material propylene prices means that the cost support continues to weaken, domestic demand still needs to be restored, international public health events have led to export obstruction, and the propaganda march will still face greater pressure, and prices continue to fall. event. Then, how the main downstream profit situation will change will remain the focus of market attention. It is expected that under the circumstances of a high probability of downward market prices and weak terminal demand, it is difficult to improve the main downstream profit status of propylene, and some downstream such as butanol may continue to be in a loss. Although the remaining downstream are expected to maintain profitability, but profit margins Not optimistic. The progress of the international public health events in the later period requires close attention, and the overall market remains difficult to be optimistic.