Cost-Supply Rotation Supports Market Center Shift Upward (October 2026)

1. Key Market Focus This Month

① Raw material propylene prices fluctuated upward to reach a historical high, while liquid chlorine saw narrow fluctuations. Cost support remained relatively strong, driving up the average price of propylene oxide (PO), but the increase was smaller than that of raw materials, resulting in continued losses for producers.

② Profit margins fluctuated around the break-even line throughout the month. Frequent maintenance shutdowns occurred across units, with monthly output reaching 589,000 tons and a capacity utilization rate of 71.05%.

③ Prices exhibited an upward trend amid volatility. The core market logic shifted from cost-push factors, lack of supply pressure, and rigid demand resonance to poor transmission of high prices, reduced demand, and bidding wars. This led to frequent adjustments, with prices operating within a relatively high range.

2. Domestic Propylene Oxide Market Analysis

In October 2026, the domestic propylene oxide market generally showed an upward trend amidst volatility. Supported by costs and alternating supply dynamics, the overall trading range consolidated at levels above 10,000 Yuan/ton.

At the beginning of the month, coinciding with the National Day holiday, prices rose slightly before falling back. On the first day of the holiday, prices dropped significantly to lower levels; downstream buyers adopted a wait-and-see approach before stabilizing. Subsequently, propylene prices surged strongly, some plants halted external sales, suppliers maintained steady shipments, and inventories fell to low levels. Prices rose consecutively during the holiday. After the holiday, rigid downstream demand supported transactions, extending the upward momentum until prices reached higher levels and temporarily plateaued. From mid-month, partial unit maintenance and load reductions caused short-term supply contractions, appropriately extending the consolidation period. However, downstream demand sentiment cooled, cost-side increases stagnated, industrial chain transmission became inefficient, and purchasing volumes decreased. The market softened and pulled back, then quickly rebounded due to improved sentiment driven by strong crude oil prices. However, the sustainability of this positive factor was insufficient. After rising too fast and by a large margin, downstream buyers returned to caution and reduced follow-up purchases. The market consolidated weakly, with increased soft negotiations. By the end of the month, the market experienced frequent narrow-range adjustments due to the tug-of-war between supply-demand and costs.

Overall, the core logic for October shifted from cost-push, lack of supply pressure, and rigid demand resonance to poor transmission of high prices, reduced demand, and weakening propylene prices. The market stalled and loosened after hitting highs, but the price center of gravity moved upward overall.

Table: Domestic Propylene Oxide Price Change Table
Unit: Yuan/Ton

Source: Chempricehub Information

3. Analysis of Market Influencing Factors

1. Unit Dynamics: On the supply side, units such as Zhonghai Fine Chemicals, Jincheng, and Shenghong remained shut down. Satellite and Qixiang units operated stably. Sanyue, Huatai, and Jinling experienced short-term load reductions and volume cuts. Other individual units saw brief fluctuations, resulting in total output of 589,000 tons.

2. Slight Profit Recovery: During this period, the profit margin for domestic chlorohydrin process PO was -589.6 Yuan/ton, a decrease of 375.84 Yuan/ton compared to the previous period. The HPPO process profit margin was -1126.31 Yuan/ton, a decrease of 304.65 Yuan/ton. Throughout the month, raw material propylene prices surged, while liquid chlorine prices fluctuated primarily around zero/narrow ranges. Although the average PO price increased, the degree of loss widened compared to the previous period. Regarding raw materials, the average propylene price for this period was 10,586.67 Yuan/ton, an increase of 998.25 Yuan/ton or 10.41% compared to the previous period. The average PO price increase for the month was 4.48%, which was less than the propylene price increase.

4. Propylene Oxide Market Outlook and Analysis

For November, raw material propylene is expected to pull back and consolidate, while liquid chlorine will show weakness amidst fluctuations. Cost support is projected to weaken slightly, with attention focused on crude oil volatility. Fundamentally, compared to October, previously maintained chlorohydrin process units are expected to gradually resume normal operations. Binhua Dongrui plans maintenance along with polyether units, Wanhua Phase III remains shut down, and Zhejiang Petrochemical's PO and polyether units are undergoing annual maintenance. Some units may adjust loads based on profitability. Supply volume is expected to moderate contraction. On the downstream demand side, winter is typically a relative off-season. Stable, wave-like rigid demand purchasing is expected, with general market sentiment waiting for increased supply. Overall, with slightly weaker cost support, increasing supply, and flat demand, PO prices are predicted to exhibit a volatile downward trend, with the average price declining narrowly. Attention should be paid to crude oil fluctuations. Based on the above, the domestic spot average price is projected to be around 11,000 Yuan/ton (Shandong spot ex-factory).

For more monthly market analysis, please refer to the Chempricehub Propylene Oxide Monthly Report.