Propylene oxide seen retreating to around 10,500 RMB/ton in November as supply rises and demand weakens

【Introduction】 In October, the domestic propylene market was strongly boosted by tightening supply, supported by phased downstream demand. The market performance exceeded expectations, with the monthly average price reaching 10,750 RMB/ton as of October 30, a month-on-month increase of 11.85%, hitting a multi-year high. Looking ahead to November, cost-side expectations remain bullish; however, pressure from localized supply increases and limited downstream follow-through due to high feedstock costs will remain key constraints on the market. Propylene prices are expected to retreat from highs, with the monthly average price likely hovering around 10,500 RMB/ton.

I. Supply Side: Device Start-ups and Shut-downs Create Tug-of-War; Overall Supply Remains Tight

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

Data Source: Chempricehub Information

According to Chempricehub data statistics, domestic propylene production in October was 5.0362 million tons, an increase of 108,400 tons month-on-month (September production revised to 4.9278 million tons). The capacity utilization rate for the month was 69.00%, a decrease of 0.60 percentage points month-on-month (September utilization rate revised to 69.60%). Units undergoing maintenance, including Zhenhua, Luxi, and Lianhong, have not yet resumed operations. Additionally, several units such as Wanhua Phase II, Haiwei Petrochemical, and Nanjing Chengzhi have newly shut down. Consequently, spot propylene supply remains persistently tight.

By process route, the capacity utilization rate of domestic PDH units in October was 71.1%, a decline of 3.6 percentage points month-on-month. This drop was primarily driven by the shutdown of the Haiwei PDH unit, while other PDH units like Zhenhua, which shut down in late September, have not yet restarted, pulling down overall operating levels. Naphtha cracking unit utilization rose to 72.6%, up 1.3 percentage points month-on-month, mainly driven by the restart of Yangzi Petrochemical's cracking unit. MTO unit utilization stood at 74.2%; although Nanjing Chengzhi's MTO unit shut down, the resumption of operations at Datang Duolun and Lianhong MTO units at the end of September supported overall October utilization rates.

Looking ahead to November, previously maintained units such as Luxi Chemical, Lianhong New Materials, Zhenhua Petroleum, and Xintai Petrochemical are expected to restart, leading to anticipated supply increases that may exert pressure on local markets. However, with PDH units at Jinneng Phase II and Bohua entering maintenance sequentially, these increases will be offset by reductions. The supply landscape in November is expected to remain tight, with projected output of 4.95 million tons.

II. Demand Side: Divergent Downstream Operations; High Feedstock Costs Suppress Demand Elasticity

According to Chempricehub data, actual domestic propylene consumption in October was 5.256 million tons, a month-on-month increase of 3.2% (September actual consumption revised to 5.091 million tons), representing a year-on-year decrease of 5.2%.

In terms of downstream operating performance, the utilization rate for major downstream PP granules was 65.88%, down 1.83 percentage points month-on-month; PP powder utilization was 20.05%, down 2.76 percentage points; PO utilization was 71.0%, up 3.11 percentage points; n-butanol utilization was 73.00%, flat month-on-month; acrylonitrile utilization was 73.31%, down 0.84 percentage points; and acrylic acid utilization was 68.46%, down 2.98 percentage points.

For November, although some PP granule, n-butanol, acrylic acid, and propylene oxide units are expected to see slight increases in operating rates, external procurement demand for PP powder remains weak. Combined with planned shutdowns at certain acrylonitrile units, there is an expectation of localized demand declines. Furthermore, with raw material prices remaining generally high and downstream profitability showing no significant improvement, the risk of economic shutdowns increases, suppressing market sentiment.

III. Supply-Demand Balance: Tight Equilibrium Continues; Gap Widens Slightly Month-on-Month

Chempricehub's supply-demand calculation shows that total propylene supply in October was 5.246 million tons, against total demand of 5.257 million tons, resulting in a supply-demand gap of 11,000 tons, which widened slightly month-on-month. Although total propylene production increased month-on-month, daily average supply fell back. Coupled with the implementation of new maintenance shutdowns, the effective circulation volume of commercial goods continued to tighten, providing strong support for propylene prices.

Looking ahead to November, overall propylene supply is expected to remain tight. As loadings at the Zhenhua unit gradually increase, the supply tension may ease marginally. Projected November propylene production is 4.95 million tons, with downstream consumption estimated at approximately 5.164 million tons. The supply-demand difference will remain negative, indicating a continuation of the tight equilibrium pattern.

IV. Market Outlook: Mixed Fundamentals Lead to Consolidation and Retreat from Highs

The propylene market in November will still be dominated by costs and supply-demand fundamentals. On the cost side, international crude oil retains upside potential, providing strong cost support for propylene. On the supply side, operational uncertainty persists for multiple domestic PDH units, where start-ups and shut-downs offset each other, keeping overall output tight. However, the resumption of large-scale external sales enterprises in the Dongying area may bring shipment pressure to regional supplies. On the demand side, partial downstream units for PP, PO, and phenol-ketone plan to resume operations, while some acrylonitrile units plan to shut down, creating mixed signals in demand. There is a need to closely monitor the risk of staged economic shutdowns downstream caused by persistently high raw material prices.

Considering both cost and supply-demand fundamentals, Chempricehub predicts that domestic propylene prices in November are expected to retreat and consolidate, with the monthly average price likely running around 10,500 RMB/ton.

Given the significant uncertainties in the subsequent market, it is recommended that industry participants focus on tracking:

1. Progress of start-ups and shut-downs for various supply-side units.
2. Changes in downstream product profitability and procurement pace.
3. Dynamics of temporary external propylene sales from integrated units.