Market Overview
This week, the domestic propylene market surged significantly after the holiday and then turned into a high-level consolidation. On October 15th, the benchmark price of propylene was 10701.00 yuan/ton, an increase of 10.23% from 9707.67 yuan/ton at the beginning of this month.
Fundamental analysis
（1） Supply side: Device maintenance brings reduction, and spot circulation is tight
This week, the domestic supply of propylene commodities remained relatively tight. Some domestic refineries and propane dehydrogenation units have entered the maintenance cycle, and the export volume of commercial propylene has shrunk. The market circulation of goods is limited, and production enterprises have a strong willingness to raise prices. Although some maintenance equipment is planned to resume production in the near future, the pace of capacity release is slow, making it difficult to quickly make up for the shortage of goods in the short term, and spot supply support still exists.
（2） On the demand side: downstream synchronous rise, mainly supported by essential needs
On October 15th, the benchmark price for PP (wire drawing) was 10656.67 yuan/ton, an increase of 7.28% compared to the beginning of this month (9933.33 yuan/ton).
On October 15th, the benchmark price of epichlorohydrin was 11600.00 yuan/ton, an increase of 7.41% compared to the beginning of this month (10800.00 yuan/ton).
The two core downstream products, brushed PP and epoxy propane, have risen synchronously with the increase in propylene raw material prices. Downstream factories are stocking up at a low level before the holiday, maintaining essential purchases during the period of raw material price increases, and orders provide support for spot transactions. However, the continuous increase in raw material prices has compressed the profit margins of downstream production. Downstream consumers are cautious in pursuing higher prices and mainly rely on on-demand procurement, lacking large-scale hoarding actions. There is no explosive increase in procurement on the demand side.
（3） Macro and International Situation
International crude oil is fluctuating at a high level due to geopolitical disturbances, and the cost side indirectly supports propylene. The operating rate of overseas olefin plants fluctuates, the increase in propylene import sources is limited, and the external supply impact is not significant. The international situation still remains uncertain, and if there is a significant fluctuation in crude oil prices, it will have a transmission impact on the sentiment of the domestic chemical market.
4、 Market analysis and judgment
In the short term, the domestic supply and demand pattern of propylene is still tight, and the bullish structure of the moving average has not been disrupted. The price of propylene is likely to maintain a high and volatile operation. Focus on tracking three major variables in the future:
One is the progress of resuming production of maintenance equipment, and the restoration of supply will gradually alleviate the tight supply situation; The second is the profitability level of downstream products such as PP and epichlorohydrin. If downstream products continue to suffer losses, it may suppress the demand for raw material procurement; The third is the market sentiment transmission caused by fluctuations in international crude oil prices. Overall, it is difficult to quickly reverse the short-term high level pattern of propylene, but further significant upward momentum will weaken, and the market is likely to enter a high-level oscillation consolidation.
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