[Industry Focus]：Analysis of the trend of the propylene market in 2023, is it up or down?

the first half of 2023, the domestic propylene market fluctuated, hitting its lowest point since May 2020 in mid-June. Looking at the market outlook, the propylene market may remain weak and volatile in the second half of the year, and supply pressure is expected to be greater.

the first half of 2023, the domestic propylene market fluctuated and hit its lowest point since May 2020 in mid-June. In the first half of 2023, the average price of propylene market in Shandong was 7058 yuan/ton, down about 14% year on year.

Specifically, the highest point in the first quarter of this year was 7700-7750 yuan/ton in January, and the lowest point in mid-June was 6000-6070 yuan/ton, a range of about 28%.

Source: Jinlianchuang

Q1: first up and then down, the center of gravity is weak.

at the beginning of the import propane supply tight, Shandong PDH equipment parking burden, after the Spring Festival downstream just need to fill the warehouse. The overall supply and demand have improved, and the market price of propylene has increased. Subsequently, downstream demand was weak, cautiously chasing high buying, trading faded and prices fell. However, Shandong, North China PDH and other propylene equipment parking concentration, the market decline is relatively limited.

March, the fundamentals of empty pressure increased, the decline expanded. First, the European and American banking crisis, international crude oil prices plummeted, macro guidance short; second, Tianhong and other PDH maintenance delay, the surrounding supply inflow increased, supply pressure is too large; third, the long-term loss of powder, low enthusiasm to start work. At the same time, acrylonitrile plant maintenance extended, demand continued to be depressed. The second quarter of

: small rise and fall, falling to a new low

April, the domestic propylene market price rose slightly. Some new PDH units have been added to the market for maintenance, and some new downstream units have been put into production. Propylene self-use increased export volume gradually decreased, the supply pattern is still relatively tight, at the same time, due to the early propylene prices fell to a low level, downstream polypropylene profits rebounded, procurement enthusiasm has increased, propylene plant shipments smooth.

from late April to mid-June, the domestic propylene market price fell sharply. First, the early maintenance of PDH unit concentrated on restarting shipments, increasing the sales volume of propylene, suppressing the market mentality. Second, polypropylene profits are shrinking, and there is a strong resistance to high prices. However, large chemical downstream factories such as butyl octanol and acrylonitrile have increased their work stoppage, the downstream has been cautious, the market trading atmosphere has softened, and the mainstream transaction price has been continuously falling.

after mid-June, as propylene prices fell to new lows, polypropylene futures rebounded, powder profit stop-loss to profit, market trading rebounded. In addition, Zibo PDH equipment parking increased, the overall supply and demand side to strengthen, supporting the propylene market transaction price rebound.

looks forward to the market outlook, and it is expected that the propylene market will maintain a weak fluctuation trend in the second half of the year, and the supply side pressure is expected to be higher.

in crude oil, international oil prices are expected to fluctuate and the market will be in short supply. Oil-producing countries are stepping up efforts to reduce crude oil production. Meanwhile, demand for crude oil in Asia is on the rise. In the second half of the year, we will focus on the impact of interest rate hike policies in Europe and the United States, US crude oil reserves and new capacity of Chinese refineries on crude oil demand. Overall, crude oil is expected to be strong and macro support is acceptable.

in the supply and demand, propylene industry chain upstream and downstream equipment capacity to maintain rapid growth. From the perspective of new equipment capacity, supply and demand basically maintained synchronous growth. However, some downstream equipment, as supporting facilities, is expected to produce later than propylene equipment, which may lead to short-term high sales of propylene in local markets and drag down market prices.

in terms of equipment maintenance, equipment maintenance in the propylene industry is mostly concentrated in the first half of the year. Donghua Zhangjiagang PDH equipment is expected to stop for maintenance in the second half of the year. Xinpu Chemical was repaired from June to the end of July, and there was little news of propylene planned maintenance. However, with the large-scale production of new PDH equipment in China, the increase in the demand for imported propane may lead to an increase in the price of imported propane, thus squeezing PDH profit margins, focusing on the parking burden caused by PDH economic problems.