Slightly Tight Supply Supports Market; High-Level Fluctuations Persist (August 2026)

1. Market Focus Points for This Month

• ① Raw material propylene remained at relatively high levels, liquid chlorine fluctuated in positive/negative ranges, and cost support stayed firm. The average price of propylene oxide (PO) rose, and profitability for multiple processes recovered slightly.
• ② Profit margins fluctuated widely during the month, with frequent unit maintenance changes. Monthly output reached 499,800 tons, with capacity utilization at 60.25%.
• ③ Overall, prices showed high-level volatility with an M-shaped trend. The main drivers were still cost and supply. High maintenance-related output losses were the key reason prices remained firm. On the demand side, buyers only purchased on a rigid-need basis, and high prices suppressed transactions. The market operated at high levels amid a tug-of-war between a pressure-free supply side and resistant downstream buyers.

2. Domestic Propylene Oxide Market Analysis

In August 2026, the domestic PO market showed a high-level volatile, M-shaped trend. At the beginning of the month, the market continued the late-July pattern of rallying and then pulling back, with prices fluctuating narrowly at high levels and the price center drifting slightly lower under supply-demand negotiation. In mid-month, concentrated unit maintenance and load-reduction news gradually fulfilled supply-side contraction expectations. Combined with periodic strengthening of raw material cost support, the market bottomed out near 9,000 yuan/ton and quickly rebounded. During this period, major units such as Wanhua ran at reduced loads, and some planned new capacity additions were repeatedly delayed, leaving the tight spot supply condition largely unchanged. Prices rose sharply and again approached the 10,000 yuan/ton threshold. However, after prices reached high levels, transmission down the industrial chain was blocked. Downstream resistance intensified, and the demand side exerted reverse pressure on PO. After a brief high-level plateau, prices fell with fluctuations in the latter part of the month.

Overall, the core market driver in August shifted from cost support to supply-side factors. The tight supply pattern caused by concentrated unit maintenance was the main reason for price strength. Meanwhile, demand-side purchasing remained limited to rigid needs, and high prices constrained transactions. The market consolidated at high levels amid the interplay between an unpressurized supply side and reluctant downstream buyers.

Table: Domestic PO Price Change Table

Unit: yuan/ton

Source: Chempricehub

3. Analysis of Market Influencing Factors

1. Unit dynamics: On the supply side, units including Zhonghai Jingxi, Jincheng, Shenghong, and Qixiang remained shut down. Wanhua reduced load for a short period. Ruiheng and Yida restarted, while Lianhong gradually resumed operations toward the end of the month. Satellite halted for maintenance, and Shida was shut down for column cleaning. A few units reduced loads. Monthly output was 499,800 tons.

2. Profitability recovered slightly: In this period, the profit for domestic PO via the chlorohydrin process was -641.06 yuan/ton, up 265.95 yuan/ton month-on-month. The HPPO process profit was -1,441.13 yuan/ton, up 537.40 yuan/ton month-on-month. During the month, raw material propylene prices moved in a high-level range, liquid chlorine adjusted narrowly in positive/negative territory, and average PO prices rose. Losses across all processes narrowed month-on-month. On the raw material side, the average propylene price in this period was 8,505.79 yuan/ton, up 350.79 yuan/ton, or 4.30%. The average PO price rose by 9.88% over the month, exceeding the increase in propylene.

4. Propylene Oxide Market Forecast and Analysis

In September, raw material propylene is expected to ease slightly, while liquid chlorine is tentatively expected to decline first and then rise. Cost support should remain acceptable, and fluctuations in crude oil should be monitored. On the fundamentals side, compared with August, Yida and Lianhong are expected to operate at normal and stable rates. Qixiang and Satellite may restart units, and Shenghong may potentially restart in the latter ten days of the month. Some units may adjust loads based on profitability, so supply is expected to increase. On the downstream demand side, the traditional "Golden September" peak season may bring some recovery. Yinuowei and Depu's new units are expected to release incremental volume, but actual demand growth may be relatively moderate. Attention should be paid to downstream profitability and cost pass-through. Overall, the market is expected to see timely cost support, with increases in both supply and demand partially offsetting each other. PO prices may first correct somewhat and then fluctuate narrowly, with average prices edging downward. In summary, the average domestic spot price is expected to be around 9,200 yuan/ton (Shandong ex-works in cash).

For more monthly market analyses, please refer to the PO monthly report from Chempricehub.