Introduction: Since April, the domestic propylene oxide (PO) market has experienced a pattern of initial rise followed by decline. From the beginning of the month until around the Qingming holiday, strong support from supply-side factors drove prices to continue climbing, reaching a new high. Prices in Shandong stabilized and consolidated after the mainstream cash ex-works price hit 13,300 yuan/ton. However, as repeated fluctuations in the international situation had a diminishing impact on market sentiment, and new order feedback from downstream demand weakened, prices shifted to a downward trend this week, partly influenced by news of maintenance and production cuts. By April 15th, the mainstream cash ex-works price in Shandong had fallen to 12,000 yuan/ton, a drop of 9.77% from the high, returning to the level seen on April 1st. Currently, cost support has strengthened, but before a substantial recovery in downstream purchasing activity, the market decline may pause as it enters a phase of digestion and consolidation, awaiting clearer signals from terminal demand.

Supply: Concentrated Plant Fluctuations Within the Month; Focus on Volume Changes Materializing in Late April

From the supply side, plant operations in April have seen relatively concentrated fluctuations. Short-term production reductions and fluctuations at the beginning of the month significantly supported the continued price increase to high levels. Recently, news of planned restarts for some previously idled plants has been released, weakening supply-side support. Increased wait-and-see sentiment among market participants, coupled with poor downstream feedback, led to the market price decline.

Current daily production is maintained at around 19,000 tons. Looking ahead, supply increases and decreases in late April are expected to be relatively concentrated. Preliminary theoretical calculations suggest reductions may slightly outweigh increases in late April, but the timing is later, and actual implementation requires monitoring. Overall, the net impact may be reduced after offsetting effects.

Demand: Order Volume Shrinks, Sales Are Sluggish; Some News of Production Cuts Released

On the demand side, from the start of the upward market trend in March until early April, overall order feedback was good, and price increases in the latter stage often exceeded the rise in raw material costs. However, the impact of recent repeated fluctuations in the international situation has cooled, and terminal customer feedback indicates difficulties in passing on upstream price increases, leading to reduced acceptance of high-priced raw materials. Since last week, several polyether producers have released news of maintenance and production cuts, creating a bearish atmosphere in the market.

Looking forward, although the significant decline in PO prices has provided concessions to downstream sectors, immediate terminal feedback remains limited. Some customers are cautiously waiting and observing the market. Follow-up purchasing may require sustained signals of market stabilization. Specific feedback needs to be monitored.

Cost: Main Raw Materials Mostly Stable or Rising; Cost Support Strengthens

This week, both propylene and liquid chlorine prices increased significantly. As of April 15th, based on representative production processes, the theoretical profit for the chlorohydrin process was 611.5 yuan/ton, and for the HPPO process was 469 yuan/ton. Compared to last Wednesday, profit margins have shrunk by over a thousand yuan, a decrease of 71-72%. The main reasons are the significant decline in PO prices and the rebound in liquid chlorine prices.

Looking ahead, PO profit margins have clearly narrowed, and the influence of the cost side has strengthened compared to the earlier period. Suppliers have a stronger intention to stabilize prices. Even if supply and demand fundamentals remain weak, the room for further decline may be relatively limited. Also, attention should be paid to the planned maintenance shutdowns of Qixiang and Ruihong at the end of the month, as well as the restart intentions of other plants.

Outlook: Short-term Stabilization and Digestion; Increased Game-Playing; Focus on Actual Supply-Demand Fluctuations Materializing

In the short term, following this week's significant decline, the market has released signals of price stabilization. However, waiting for follow-up feedback from the terminal may take some time. The market is expected to consolidate and digest in the near term.

From a medium-term perspective, there are numerous expected plant fluctuations in mid-to-late April, and their actual implementation needs to be watched. As suppliers still have some expectations of production reductions, PO is relatively more likely to stabilize or experience a brief rebound. However, downstream performance does indeed have a counteracting effect on PO. Given the recent price decline, the market is expected to experience narrow fluctuations going forward, with the mainstream range forecasted at 11,800-12,800 yuan/ton cash ex-works in Shandong.