Initial Rise Followed by a Decline; Overall Trading at Elevated Levels (September 2026)

1. Monthly Market Focus

① Propylene feedstock prices fluctuated at elevated levels, while liquid chlorine remained positive and volatile within a specific range. Cost support was adequate, leading to an increase in the average price of propylene oxide (PO) and a slight recovery in profitability across various production processes.

② Profit margins fluctuated around the cost line during the month. Maintenance activity decreased compared to the previous month. Monthly output reached 545,000 tons, with a capacity utilization rate of 67.89%.

③ Prices followed a trend of consolidation followed by a strong rally, then stagnation at high levels before softening and falling back. The core market logic shifted from the combined effect of strong cost push and tight supply to a tug-of-war between increasing supply and demand resistance. After peaking, prices pulled back but remained generally at high levels.

2. Domestic Propylene Oxide Market Analysis

In September 2026, the domestic propylene oxide market exhibited a pattern of consolidation followed by a strong rally, then stagnation at high levels before softening and declining. Prices rose first and then fell, with the overall center of gravity shifting significantly upward.

At the beginning of the month, the market was flat and weak, but sharp increases in crude oil and propylene strongly pushed up costs. Combined with a tight balance on the supply side and limited release of incremental supply, downstream sectors gradually followed suit, causing prices to rise consecutively and return above 10,000 CNY/ton. In mid-month, propylene prices surged again over a wide range. As incremental supply had not yet materialized, bullish sentiment intensified, pushing prices up to new highs for the second half of the year. Subsequently, the downward transmission of high prices faced obstacles, and downstream resistance became apparent. However, with low supplier inventories and persistent rigid demand, the market entered a phase of narrow fluctuations at high levels. Toward the end of the month, cost support weakened, suppliers began releasing more volume, and positive factors diminished. Poor factory shipments led to gradual softening in offers. After dropping to lower points before the holiday, some downstream stockpiling helped stabilize and slightly rebound the market.

Overall, the core logic in September shifted from the resonance of strong cost push and tight supply to the game between increasing supply and demand resistance. After hitting a peak, prices pulled back, but the market remained generally at high levels.

Table: Domestic Propylene Oxide Price Changes
Unit: CNY/ton

Source: Chempricehub Information

3. Analysis of Market Influencing Factors

1. Plant Dynamics: On the supply side, plants including Zhonghai Fine Chemicals, Jincheng, and Shenghong remained shut down. Satellite Chemical and Qixiang devices restarted and recovered sequentially. Lianhong operated stably. Zhejiang Petrochemical reduced output temporarily. Yida shut down at the end of the month. Minor short-term fluctuations occurred in individual units, resulting in total production of 545,000 tons.

2. Slight Recovery in Profits: During this period, the profit margin for the chlorohydrin process in China was -213.76 CNY/ton, an improvement of 427.3 CNY/ton month-over-month. The HPPO process profit was -821.66 CNY/ton, an improvement of 619.47 CNY/ton month-over-month. Within the month, propylene feedstock prices fluctuated within a range, while liquid chlorine prices remained predominantly positive and volatile. The average price of PO increased, reducing the extent of losses across both processes compared to the previous month. Regarding raw materials, the average price of propylene was 9,588.42 CNY/ton, an increase of 1,082.63 CNY/ton (12.73%) month-over-month. The increase in the average price of propylene oxide (15.53%) exceeded that of propylene.

4. Propylene Oxide Outlook and Analysis

In October, propylene prices are expected to decline narrowly, while liquid chlorine is forecasted to dip before rising. Cost support remains adequate, with attention needed on crude oil volatility. Fundamentally, compared to September, Lianhong, Satellite, and Qixiang plants are expected to operate stably at high loads, increasing output. Shenghong may restart in mid-month, and Jinling has plans for short-term maintenance. Some plants may adjust loads based on profitability, leading to continued increases in supply. On the demand side, downstream consumption in "Golden October" is largely seen as stable or slightly decreasing. New capacities at Yinuowei and Depu can absorb some volume. There may be short-term rigid demand for restocking after the National Day holiday, followed by a return to wave-like rigid purchasing. Overall, the market faces timely cost support, higher supply, and slightly lower demand. PO prices are expected to show a trend of volatile decline, with the average price narrowing downward, though crude oil fluctuations remain a key variable. Based on the above, the domestic spot average price is projected to be around 10,600 CNY/ton (Shandong ex-works cash).

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