This Week's Propylene Oxide Market Prices First Declined Then Rose (6.1-6.4) in China

June 4th News

Raw Materials Side: This week, the propylene market—its raw material—has been largely characterized by weak price stabilization, driven by the concentrated return of maintenance-shut units, which has provided limited support to the cost side of propylene oxide. According to monitoring systems, as of June 4, the benchmark price for propylene stood at 9,004.33 CNY per ton, down 1.42% from the beginning of the month (9,134.33 CNY per ton).

Supply side: The contraction in supply this week was the core factor driving the market's stabilization and recovery. Zhenhai Phase I and Shenghong continued to be shut down, while Ruiheng and Sanyue slightly increased their load but the increase was limited. Jinling, Xinyue, and Zhe Petrochemical reduced their load. The concentrated shutdowns and load reductions led to a temporary tightening of spot supply. After the inventory pressure was alleviated, producers' willingness to control the volume of goods released increased, providing fundamental support for the price to stop falling and rebound.

On the demand side, polyether polyols still account for over 75% of propylene oxide downstream consumption. At the beginning of this week, downstream players continued to adopt a cautious, wait-and-see attitude, with new orders showing only moderate activity and only a small number of buyers stepping up their purchases. As the market has experienced consecutive price declines, releasing downward risks, the wait-and-see sentiment has eased somewhat, and downstream buyers have gradually started to resume purchasing, leading to a slight recovery in market trading activity. However, overall, given the traditional off-season for demand, the operating rates of major polyether manufacturers remain limited, with most procurement driven by rigid demand. Thus, the support from the demand side still needs to be further strengthened.

Comprehensive forecast: Propylene oxide analysts believe that this week, the propylene oxide market has completed a phased bottoming out driven by concentrated load reductions in the supply end, with prices rebounding from their lows. However, due to the overall weak downstream demand and the sluggish production and sales of polyether chains, the momentum for a market reversal is still insufficient. The subsequent trend will need to closely monitor changes in operating rates and the recovery of terminal orders.