Introduction: Since April, propylene prices have surged, with the mainstream average price breaking through 9,500 RMB/ton and continuing to climb, driven by tight supply and cost support amplified by geopolitical tensions. However, as geopolitical signals turned towards de-escalation and energy futures plummeted, market sentiment shifted rapidly to caution. Propylene prices have now turned from gains to losses, officially entering a correction phase. In the short term, downstream purchasing appetite will be the key driver of price movements, with further downside potential. The mainstream average price may retreat to seek support in the 9,000-9,100 RMB/ton range. Market participants should closely monitor geopolitical developments. A renewed escalation in conflict would shorten the correction cycle, potentially leading to a renewed rise in costs and prices.

I. Dual Supply-Demand Contraction Persists, Upward Momentum Weakens

Taking the data from the week of March 27 to April 2 as an example, propylene production in Shandong was 204,100 tons, a slight decrease of 300 tons week-on-week. Downstream consumption was 190,200 tons, also down slightly by 200 tons week-on-week. This simultaneous minor contraction in both supply and demand maintains an overall tight market structure, providing periodic price support. By April 7, the mainstream price had probed higher to 9,610 RMB/ton, up 9.64% from the beginning of the month. However, influenced by weaker futures and a cautious market mood, the upward price momentum has clearly weakened and prices are struggling to climb further.

With the current downtrend already underway, let's briefly analyze how the fundamental supply-demand situation might evolve.

II. Supply Side: Stable PDH Operations with Fluctuations, Maintenance Expectations Provide Bottom Support

As shown in the data, overall fluctuations in Shandong's propylene units were limited during the period, with the industry's daily operating rate maintained around 57.10%. PDH units were a mix of shutdowns and normal operations, keeping regional supply relatively stable.

Looking ahead, Qingdao Jinneng's Phase I PDH unit is scheduled for maintenance in mid-April. At that time, Shandong's daily propylene output may shrink to around 27,000 tons. Expectations of further supply contraction provide some bottom support for prices. The current lack of significant supply loosening acts as a major resistance against a deep price decline.

III. Demand Side: Persistently Weak Downstream Margins, Routine Procurement Dominates

In terms of profitability, margins for propylene and its downstream derivatives are generally weak. Comparing data from April 7 and March 31, PDH profits fell by 153%, PP powder profits fell by 155%, acrylonitrile profits fell by 167%, and 2-EH (Octanol) profits fell by 34%. Only PO (Propylene Oxide) profits saw a slight increase of 15%. The continued pressure on downstream profits directly dampens enthusiasm for raw material procurement, leaving high propylene prices without strong demand support.

From an operational perspective, mainstream downstream operations in Shandong are generally weak, involving products like PP, 2-EH, and PO. Downstream demand decreased by 15,300 tons last week. In the short term, only the restart of Shida Shenghua and Jianlan Chemical units will bring minor incremental demand, while most other units remain shut down, indicating weak demand recovery. Downstream enterprises are predominantly purchasing based on immediate, routine needs in small lots, resulting in weak demand-side support for prices.

IV. Trend Outlook: Short-term Correction Seeking Support, Medium-to-Long-term Rebound Potential Remains

(I) Short-term Trend: Market Enters Downward Exploration Phase

In the short term, propelled by a combination of geopolitical de-escalation, weaker energy futures, cautious market sentiment, and looser spot offers, propylene has officially entered a downward channel. Downstream acceptance will be the core variable for price fluctuations, with mainstream prices likely moving towards the 9,000-9,100 RMB/ton range to seek support. Additionally, close attention must be paid to geopolitical conflict developments. If tensions escalate again, the cost side will strengthen once more, potentially leading to a rapid halt in the price decline and a rebound.

(II) Medium-to-Long-term Trend: Multiple Drivers Remain, Rebound Anticipated

From a medium-to-long-term perspective, propylene still possesses multiple supportive factors:

• Cost Side: Geopolitical conflicts are not fully resolved, leaving room for potential crude oil price spikes. Cost support has not vanished.
• Supply Side: Maintenance plans for multiple PDH units are expected to be implemented gradually, potentially tightening market supply again.
• Demand Side: Expectations exist for new downstream capacity startups and operational rate recoveries, suggesting routine demand will gradually improve.

Driven by these three factors—cost, supply, and demand—propylene's medium-term market still holds a solid foundation for a rebound. Prices are expected to re-enter an upward channel once market sentiment stabilizes.