1、 October market review: Supply contraction drives prices to new highs
In October, the domestic propylene market experienced a strong and unexpected rise. Under the combined effect of significant supply contraction caused by centralized maintenance of core devices and the release of downstream periodic replenishment demand, the market has been thriving. As of November 3rd, the benchmark price of propylene was 11797.67 yuan/ton, a decrease of 1.69% compared to the beginning of this month (12001.00 yuan/ton), setting a new historical price peak in recent years.
Performance of production and operating data:
In October, domestic propylene production recorded 5.0362 million tons, an increase of 108400 tons compared to September (revised to 4.9278 million tons); The industry average capacity utilization rate is 69.00%, a slight decrease of 0.60 percentage points compared to the previous month (revised to 69.60% in September).
Affected by the parking of Haiwei and the failure to resume the shutdown of Zhenhua since the end of September, the capacity utilization rate decreased by 3.6% to 71.1% month on month, which dragged down the overall construction. The resumption of production at Yangzi Petrochemical’s cracking unit has released incremental growth, driving the capacity utilization rate of the route up by 1.3% to 72.6% month on month. Although the Nanjing Chengzhi plant stopped and reduced production, the Datang Duolun and Lianhong plants restarted successively at the end of September, effectively offsetting the reduction, and the overall capacity utilization rate remained at 74.2%.
2、 Supply and demand game: Tightening supply of goods supports this round of price increases
From the supply-demand balance sheet, the total supply of propylene in October was 5.246 million tons, with a total demand of 5.257 million tons, showing a supply-demand gap of 11000 tons, and the gap size has slightly expanded compared to the previous period. Although the total monthly production has increased, the daily available spot resources continue to tighten due to the impact of new maintenance and equipment shutdowns, providing solid fundamental support for the significant price increase in October.
3、 Market outlook for November: Mixed long and short positions, strong expectations for high-level consolidation
Entering November, the propylene market will face a comprehensive test of cost, supply, and demand, with fierce collisions of long and short factors.
Supply side: Multiple sets of pre maintenance equipment are scheduled to restart, coupled with the resumption of large-scale external equipment in Dongying area, resulting in increased pressure on local shipments. However, the newly added maintenance plans for PDH units such as Jinneng Phase II and Bohua have to some extent created a hedge. It is expected that the overall supply will remain tight in November, with a monthly output expected to be around 4.95 million tons.
Demand side: Downstream demand presents a mixed state of positive and negative factors. On the one hand, PP、PO、 Some units such as phenol ketone are expected to resume production; On the other hand, some acrylonitrile plants plan to shut down, and the sustained high raw material costs seriously compress downstream profits. It cannot be ruled out that some plants may temporarily reduce their load or shut down due to economic deficiencies.
Trend prediction: The supply and demand in November will still maintain a gap, and the potential upward space of international crude oil also provides bottom support. However, considering the suppression of downstream willingness to receive goods by high raw material prices, the difficulty of further market competition has increased. It is expected that domestic propylene prices will gradually decline from their current high levels in November.
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