Intensified Bull-Bear Tug-of-War in Propylene Market; Outlook Points to High-Level Consolidation and Downward Correction

【Introduction】 In October, domestic propylene prices surged significantly due to a dual driver of rising costs and supply contraction caused by unit maintenance. The monthly average price in the Shandong region reached 10,750 yuan/ton, an increase of 11.85% month-on-month. Looking ahead to November and December, the tug-of-war between bullish and bearish factors will intensify. Changes in costs and supply-demand dynamics remain the core logic driving market trends, with prices expected to rise first before falling.

I. Supply Side: Frequent Fluctuations in Propylene Units; Supply Expectations Tighten First, Then Ease

Table 1: Operational Status of Domestic PDH Units (Unit: 10,000 tons)

Data Source: Chempricehub Information

In November, domestic propylene supply presents a tug-of-war scenario where reductions offset increases. On the reduction side, Jinneng Chemical and Ningbo Jinfa's Phase II PDH units entered scheduled maintenance from late October to early November. Combined with temporary operational fluctuations at Weiyuan Chemical and Wanhua Chemical units, the PDH sector experienced significant supply contraction. On the increase side, Zhenhua Petroleum’s 750,000-ton PDH unit, which had been offline for a long period, is expected to restart. Additionally, MTO units such as Lianhong New Materials and Luxi Chemical have restart plans. However, the incremental supply from these units is insufficient to cover the reductions caused by maintenance, keeping overall propylene supply tight throughout November.

Entering December, domestic propylene supply is expected to see obvious recovery. There are expectations for the resumption of operations at several PDH units—including Jinneng Chemical, Weiyuan Chemical, and Haiwei Petrochemical—as well as local refinery units like Qicheng Petrochemical, Dongying Petrochemical, and Xintai Petrochemical. Key focus should be placed on actual restart progress and the release rhythm of commercial volumes. As multiple previously maintained or fluctuating units return to operation, market supply pressure will marginally increase compared to November, and the tight equilibrium pattern in propylene is expected to gradually ease.

According to Chempricehub data statistics, domestic propylene production in November is estimated at 4.964 million tons, a decrease of 72,200 tons month-on-month. Production in December is estimated at 5.2 million tons, an increase of 236,000 tons month-on-month.

II. Demand Side: Continued Divergence in Downstream Operating Rates; High Costs Suppress Demand Elasticity

Downstream operating rates in November show clear divergence. PP granules, oxo-alcohols, and acrylic acid are expected to see slight rebounds in operating rates, with projected month-on-month increases of 2.71%, 5.00%, and 4.54%, respectively. However, external procurement demand for PP powder remains weak. Coupled with planned shutdowns of individual acrylonitrile units, its operating rate is expected to drop by 2.29% month-on-month, indicating risks of localized demand weakness. Meanwhile, propylene feedstock prices remain high, making it difficult for downstream sectors to achieve substantial profit recovery. This raises the risk of economically driven unit shutdowns, which will exert significant downward pressure on propylene prices.

Entering December, downstream sectors gradually enter the traditional off-season for end-use markets, suppressing overall operating rhythms. Operating rates for PO, PP granules, and PP powder are all expected to decline, with projected month-on-month decreases of 2.00%, 0.39%, and 0.71%, respectively. However, operating rates for varieties like acrylonitrile and oxo-alcohols may recover, providing some support for propylene demand. Overall, there is no large-scale explosive growth in downstream demand; the market remains dominated by rigid procurement needs.

In summary, downstream unit operating rates for propylene show clear divergence in November and December. While some varieties have recovery expectations, upward elasticity is limited by the end-use off-season and high raw material costs. Risks of load reductions due to economic viability still require vigilance.

III. Supply-Demand Landscape: Tight Equilibrium Continues; Gap Shifts to Small Surplus

Table 2: Monthly Propylene Supply-Demand Balance Calculation Table (Unit: 10,000 tons)

Data Source: Chempricehub Information

Chempricehub’s supply-demand calculations indicate that in November, total domestic propylene supply was 5.154 million tons against total demand of 5.165 million tons, resulting in a supply-demand gap of -11,000 tons, maintaining a slightly tight equilibrium. In December, with concentrated unit restarts, total supply rises to 5.4 million tons against total demand of 5.394 million tons, shifting the gap to +6,000 tons, moving the market from tight equilibrium to a small surplus.

Overall, in November, supply contraction coincided with a simultaneous decline in demand, maintaining the supply gap. In December, the pace of supply increment release outstripped demand recovery, causing the supply-demand landscape to loosen marginally and breaking the tight equilibrium state.

IV. Market Outlook: Bullish and Bearish Factors Intertwine; Prices Gradually Retreat from Highs

Considering comprehensive supply-demand fundamentals, the tight equilibrium in the November propylene market continues to provide support, but negative feedback from downstream persistently limits upside potential. The monthly average price for propylene in Shandong is projected at 11,200 yuan/ton. In December, with concentrated restarts of maintained units, supply pressure increases, shifting the market from tight equilibrium to a small surplus. Coupled with demand drag from the end-use off-season, the market center of gravity shifts downward, with the monthly average price expected to retreat to 10,500 yuan/ton.