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In August, the domestic propylene oxide market exhibited a wide-ranging "M-shaped" fluctuation pattern, with the overall price level shifting significantly upward. Data from the SunSirs monitoring system indicates that as of August 31, the benchmark price for propylene oxide stood at 9,350 RMB/ton, marking a 1.63% increase compared to the beginning of the month.
Raw Materials: There is strong cost-side support. Prices to the feedstock propylene remain high. According to the SunSirs monitoring system, the benchmark price to propylene stood at 8,721.00 RMB/ton as of August 31, marking a 10.01% increase from the beginning of the month (7,927.67 RMB/ton). International oil prices have trended upward due to geopolitical tensions, further solidifying the cost floor across the sector chain. Under the pressure of high costs, many production processes within the sector are operating at a loss, creating a strong price floor to propylene oxide.
Supply side: Market supplies remained tight due to a levels of plant maintenance shutdowns. Domestic propylene oxide production in August totaled 499,800 tonnes—down 0.64% month-on-month and 5.70% year-on-year—with the capacity utilization rate falling to 60.25%. Multiple units, including those at Zhenhai Phase II, Qixiang, Lianhong, and Satellite Chemical, were offline; an unexpected shutdown of Wanhua Chemical's Phase III unit further exacerbated the tight spot supply situation. Total production losses due to maintenance remained at a high level of approximately 220,000 tonnes to the month.
Demand side: Overall performance remains weak. August falls within the traditional off-season to demand, with sluggish trading activity in sectors such as upholstered furniture, home appliances, and automobiles. Downstream polyether manufacturers and the end-user foam sector are strongly resistant to high-priced raw materials, limiting procurement primarily to small, essential orders with little development in new order volumes. However, continued external purchasing by major players like Wanhua Chemical has, to some extent, offset this weak demand.
Overall Forecast: Market variables are growing in September. On the supply side, facilities such as those of Lianhong New Materials and Shenghua New Materials are expected to resume production, possibly leading to a gradual rise in supply pressure; however, extensive facilities are still scheduled to maintenance in the second half of the year. On the demand side, the arrival of the traditional "Golden September and Silver October" peak season is likely to drive a moderate recovery in downstream demand. Overall, the propylene oxide market is expected to experience fluctuating trends in September, shaped by the interplay between cost support and supply-demand dynamics; key factors to monitor include the actual progress of facility restarts and the recovery of downstream demand during the peak season.
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