In the first half of January, the Chinese propylene oxide market showed an upward trend

January 14th, News

In the first half of January, China's propylene oxide market continued its strong momentum, with prices rising significantly. According to the monitoring system, as of January 13, the benchmark price for propylene oxide was 8,333.33 CNY per ton, an increase of 7.76% compared to January 1. This price increase is the result of multiple positive factors working together, and the market is expected to maintain a relatively strong performance in the short term.

On the supply side: The unexpected tightening of market supply has been the underlying driver behind this round of price increases. First, major production facilities in many regions have either reduced output or temporarily shut down. In Shandong, the main producing area, several plants have seen their load reductions; meanwhile, key facilities in East China, such as the second phase of Zhenhai and Sinochem Quanzhou, are also undergoing maintenance and shutdowns. As a result, the nation’s overall capacity utilization rate remained relatively low at 73.47% on that day. Second, industry inventories have fallen below the “safety buffer.” As of January 9, total industry inventories stood at around 40,000 tons—far below the safety alert threshold. Factory inventories are generally low, and spot supply continues to be tight. This sudden tightening of the supply-demand balance has directly strengthened producers’ willingness to hold prices steady.

On the demand side: The robust demand is the core engine driving up prices. On the one hand, downstream polyether industries are ramping up production. For instance, new facilities operated by Shandong Longhua and Guangxi Tongkun have recently come on stream, directly boosting the rigid demand for propylene oxide. On the other hand, a key policy—known as the “last-chance effect”—is becoming increasingly pronounced. According to an announcement by the Ministry of Finance, starting April 1, 2026, the export tax rebate policy for primary-form polyethers will be abolished. To ensure orders are completed before the policy window closes, downstream foreign trade demand has surged ahead of schedule, with a large number of export orders being moved forward and concentrated in the first quarter for production. Meanwhile, domestic customers, concerned about potential future increases in raw material prices, have also proactively built up their inventories. The synchronized boost from both domestic and overseas demand has enlivened market trading activity and effectively helped absorb high-priced supply.

On the raw material side, the upward shift in the market price of propylene—a key raw material—has also fueled the upward trend and provided solid cost support. According to monitoring systems, as of January 13, the benchmark price of propylene stood at 5,921.00 CNY per ton, representing a 3.56% increase compared to the beginning of this month (5,717.67 CNY per ton).

Market Forecast: Epoxy Propane analysts believe that, amid a clear expectation of “tight supply and demand,” bullish market sentiment is rapidly intensifying. Downstream enterprises have shifted from a wait-and-see attitude to actively replenishing their inventories in anticipation of potential future price hikes and tightening supply. Meanwhile, the price of propylene—the key upstream raw material—has also shown a stable-to-slightly-rising trend since mid-January, providing relatively solid cost support for epoxy propane. Overall, driven by multiple factors—including low inventory levels, front-loaded demand, and tight supply—epoxy propane prices are expected to continue rising further in the short term. The future market direction will require close monitoring of the resumption progress of large-scale facilities such as those operated by Sinochem Quanzhou, as well as the actual sustainability of the recent surge in polyether exports.