September 4th news
In August, the Chinese epoxy propane market as a whole showed an "M"-shaped wide fluctuation trend, with a significant upward shift in the price center. According to the monitoring system, by August 31, the benchmark price of epoxy propane was 9,350 CNY per ton, an increase of 1.63% compared to the beginning of the month.
On the raw material side, cost support remains strong. The price of propylene, a key raw material, continues to stay at a high level. According to monitoring systems, as of August 31, the benchmark price of propylene stood at 8,721.00 CNY per ton, up 10.01% from the beginning of the month (7,927.67 CNY per ton). International oil prices have shown a relatively strong trend, influenced by geopolitical factors, further solidifying the lower end of the industry’s cost structure. Under intense cost pressure, many processes in the industry are operating at a loss, and this cost pressure is providing strong support for the price of propylene oxide.
Supply side: Plant maintenance has led to a continuous shortage of market supply. In August, China's propylene oxide production was 499,800 tons, down 0.64% month-over-month and 5.70% year-over-year, with the capacity utilization rate dropping to 60.25%. Multiple plants, including Zhenhai Phase 2, Qixiang, Lianhong, and Satellite Chemical, were shut down, and the sudden shutdown of Wanhua Chemical's Phase 3 plant further exacerbated the tight spot market situation. The total loss due to maintenance for the month remained at a high level of around 220,000 tons.
On the demand side, overall performance remained weak. August continued to be a traditionally slow season for demand, with subdued trading activity in sectors such as upholstered furniture, home appliances, and automobiles. Downstream polyether companies and end-use sponge manufacturers showed strong resistance to high-priced raw materials, mostly opting for small, just-in-time orders with limited new order growth. However, large producers like Wanhua Chemical continued to source supplies externally, which to some extent offset the weak demand.
Comprehensive Forecast: Market variables are set to increase in September. On the supply side, there are expectations of resumed production at facilities operated by Lianhong New Materials and Shenghua New Materials, which could gradually intensify supply pressure. However, major facilities still have planned maintenance scheduled for the second half of the year. On the demand side, the traditional peak season of "Golden September and Silver October" is approaching, potentially driving a moderate rebound in downstream demand. Overall, we expect the propylene oxide market in September to remain volatile amid the interplay between cost support and supply-demand dynamics. Key attention should be paid to the progress of facility resumption and the recovery of downstream demand during the peak season.
