In October, China’s propylene market was strongly boosted by tightened supply, coupled with phased demand support from downstream sectors. Market performance strengthened beyond expectations. As of October 30, the monthly average price stood at RMB 10,750 per ton, up 11.85% month-on-month, hitting a new high in recent years. Looking ahead to November, cost-side expectations remain firm. However, pressure from incremental supply in some regions, as well as limited buying interest amid high raw material prices, will continue to be key constraints on the market. Propylene prices are expected to retreat from high levels, with the monthly average price hovering around RMB 10,500 per ton.

According to Longzhong Information statistics: China’s propylene output reached 5.0362 million tons in October, an increase of 108,400 tons month-on-month (September output revised to 4.9278 million tons). The capacity utilization rate for the month stood at 69.00%, down 0.60 percentage points month-on-month (September capacity utilization rate revised to 69.60%). The previously scheduled maintenance units of Zhenhua, Luxi and Lianhong have not resumed operation. In addition, multiple units including Wanhua Phase II, Haiwei Petrochemical and Nanjing Chengzhi were newly shut down, keeping spot supply of propylene consistently tight.

By process route, the capacity utilization rate of domestic PDH units in October was 71.1%, down 3.6 percentage points month-on-month. This was mainly dragged down by the Haiwei PDH unit. Meanwhile, PDH units such as Zhenhua remained offline since shutdown in late September, weighing on the overall operating rate. The capacity utilization rate of naphtha cracking units stood at 72.6%, up 1.3 percentage points month-on-month, primarily driven by the restart of Yangzi Petrochemical’s cracking plant. The capacity utilization rate of MTO units was 74.2%. Although the MTO unit of Nanjing Chengzhi was shut down, the resumption of Datang Duolun and Lianhong MTO units at end-September supported the overall operating level in October.

Looking ahead to November, previously maintained units including Luxi Chemical, Lianhong New Material, Zhenhua Petroleum and Xintai Petrochemical are expected to restart, which will bring additional supply and may put pressure on regional markets. Nevertheless, PDH units such as Jinneng Phase II and Bohua will enter maintenance one after another. The supply increase will offset the supply reduction. The overall supply pattern in November will remain tight, with output projected at 4.95 million tons.

According to Longzhong Information statistics, China’s actual consumption of propylene reached 5.256 million tons in October, rising by 3.2% month-on-month (September actual consumption revised to 5.091 million tons), and down 5.2% year-on-year.

In terms of downstream operating rates, the operating rate of major downstream PP pellet plants stood at 65.88%, down 1.83 percentage points month-on-month; the operating rate of PP powder plants was 20.05%, down 2.76 percentage points month-on-month; the PO plant operating rate reached 71.0%, up 3.11 percentage points month-on-month; the octanol operating rate was 73.00%, flat month-on-month; the acrylonitrile operating rate was 73.31%, down 0.84 percentage points month-on-month; the acrylic acid operating rate was 68.46%, down 2.98 percentage points month-on-month.

Looking ahead to November, although the operating rates of some PP pellet, octanol, acrylic acid and propylene oxide units are expected to edge up slightly, the purchasing demand for PP powder from external sources remains weak. In addition, a few acrylonitrile units are scheduled for shutdown, pointing to lower demand in some regions. Meanwhile, raw material prices will stay at high levels. Without notable improvement in downstream profit margins, the risk of economic shutdowns rises, putting pressure on propylene prices.

The propylene market in November will still be driven by costs and supply-demand fundamentals. On the cost side, international crude oil still has upside potential, offering strong cost support for propylene. On the supply side, the operation of multiple domestic PDH units remains uncertain. Supply increments and reductions from unit start-ups and shutdowns offset each other, keeping overall output tight. Nevertheless, the resumption of large outbound suppliers in Dongying may bring shipment pressure to local supply. On the demand side, some downstream units such as PP, PO and phenol-acetone are scheduled to restart, while a few acrylonitrile units plan to shut down, resulting in a mixed demand outlook. Close attention should be paid to the risk that persistently high raw material prices trigger phased economic shutdowns among downstream plants.