Propylene prices surged to a high level during the holiday period; short-term trends are guided by crude oil movements.

Introduction: As October begins, the domestic propylene market has continued its upward trend, supported by tighter highway logistics capacity and downstream stockpiling. As of October 5, the mainstream average price in Shandong rose to 9,900 yuan/ton, an increase of 1.64% compared to September 30. Looking ahead, while market direction remains unclear, enterprise inventories are generally controllable. Supported by rigid downstream demand, the market is primarily in a wait-and-see mode at high levels, with crude oil trends likely becoming the core indicator for market movements.

1. Market Review: Strong Supply-Demand Support During Holiday; Upstream and Downstream Prices Rise Differently

Table 1: Domestic Propylene and Related Product Price List

Data Source: Chempricehub

Regarding prices, from September 30 to October 5, the mainstream price of propylene in Shandong rose from 9,740 yuan/ton to 9,900 yuan/ton, an increase of 1.64%. Downstream product trends diverged: Propylene oxide followed suit, rising from 10,600 yuan/ton to 10,800 yuan/ton (+1.89%), while 2-ethylhexanol weakened, falling from 8,950 yuan/ton to 8,700 yuan/ton (-2.79%). During the holiday, propylene prices were pushed up by tighter logistics and downstream stockpiling, driving propylene oxide higher simultaneously. In contrast, insufficient follow-through in 2-ethylhexanol demand put pressure on its price. The mixed performance of downstream sectors resulted in varying degrees of support for propylene.

2. Supply Side: Limited Plant Fluctuations; Overall Tight Balance Maintained

Table 2: Summary of Changes in Domestic Propylene Production and Capacity Utilization

Data Source: Chempricehub

On the supply side, as of October 5, domestic daily propylene production remained stable at 160,100 tons, with a capacity utilization rate of 68.61%. There were no significant fluctuations in plant loads during the holiday. Production enterprises maintained existing operational rhythms, keeping output steady. During the pre-holiday price surge, factory inventories remained low and manageable. With restricted logistics during the holiday combined with downstream stockpiling, enterprise shipments were smooth, resulting in minimal inventory pressure.

Looking forward, Wanhua Chemical's naphtha cracking unit is expected to reduce output due to technical modifications, while units at Luxi Chemical and Ningxia Runfeng are expected to restart after the holiday. After offsetting start-ups and shut-downs, the overall increase in production will be limited. Continued tracking of changes in plant operating rates and their impact on supply is necessary.

3. Demand Side: Stable Downstream Operating Rates; Rigid Demand Provides Solid Floor

During the National Day holiday, operating rates for downstream propylene derivatives remained largely stable. Stimulated by restrictions on logistics transportation, regional stockpiling enthusiasm recovered temporarily, driving a rapid rise in propylene prices. However, as raw material prices continued to climb, the pace of downstream purchasing slowed gradually, although rigid demand support persisted.

In the subsequent period, attention should focus on the restart progress of Zibo Qilu's normal butanol unit and changes in downstream profitability against the backdrop of high raw material costs.

4. Supply-Demand Balance: Supply Growth Weaker Than Expected; Demand Surge Creates Shortfall

Table 3: Domestic Propylene Data Forecast

Data Source: Chempricehub

According to Chempricehub's supply-demand forecast, the propylene market in October shifts from a slight surplus to a deficit, tightening the balance. Propylene production is projected at 513 (ten thousand tons) and imports at 21 (ten thousand tons), with total supply increasing by 4.11% month-over-month. Driven by downstream consumption, total demand is expected to rise by 6.02% month-over-month. The growth in demand exceeds that of supply, while exports decline. Constrained by feedstock conditions, the increment in propylene supply falls short of the increment in demand. The supply-demand gap is expected to turn negative, though actual market changes still depend on fluctuations in supply-side plants and the extent of real downstream demand improvement.

5. Market Outlook: Short-Term Guided by Crude Oil; Long-Term Under Pressure to Decline

Short-Term: During the holiday, domestic propylene prices were boosted by tighter highway logistics capacity and downstream stockpiling, rising to 9,900 yuan/ton. Currently, market direction is unclear, with a wait-and-see attitude prevailing at high levels. Crude oil trends have become the core guide for market sentiment. If crude oil remains firm, propylene prices may trade strongly within the 9,900–10,000 yuan/ton range. If crude oil weakens, it will directly dampen market sentiment, exacerbating cost pressures for downstream users at high price levels and weakening procurement follow-through. Additionally, with upcoming relaxations in highway transport restrictions, there is downward pressure on the market, potentially causing prices to retreat and oscillate within the 9,700–9,900 yuan/ton range.

Long-Term: On the cost side, international crude oil faces expectations of a downturn, which will gradually weaken its cost support for propylene. On the supply side, although Wanhua Chemical plans to reduce output via technical modifications to its naphtha cracking unit, multiple units including those at Luxi Chemical, Ningxia Runfeng, Zhenhua Petroleum, and Quanzhou Guoheng are expected to restart. This overall supply increase will suppress the market. On the demand side, downstream end-users are entering the traditional peak season, offering potential for temporary demand recovery. However, profit improvement margins for the main downstream product, polypropylene, remain limited, making it difficult to form sustained demand support, which may weigh on market operations. Based on fundamental analysis, Chempricehub predicts that domestic propylene prices in October face expectations of a narrow decline, with the monthly average price likely hovering around 9,500 yuan/ton.