Asia Propylene: Crude Reversal Ends Three-Week Price Rally

After three consecutive weeks of gains, propylene prices across Northeast and Southeast Asia moved lower this week as crude oil and propane values declined sharply. The market sentiment changed after crude prices dropped by over 5% following easing geopolitical tensions between the US and Iran, reducing immediate concerns over disruptions in the Strait of Hormuz.

Last week, spot propylene prices reached $1,040/ton CFR Northeast Asia/China and $1,030/ton CFR Southeast Asia, supported by the energy rally. However, the correction in crude quickly pulled prices lower, with buyers becoming cautious and delaying fresh purchases until the market stabilizes.

Propylene Price Snapshot

CFR China
Current Price: $1,010/ton
Weekly Change: ▼ $30

CFR Southeast Asia
Current Price: $1,015/ton
Weekly Change: ▼ $15

Northeast Asia Market Sees Correction

Although prices briefly extended gains at the start of the week, weakening crude futures reversed the momentum. Chinese domestic propylene prices also declined, while Zhengzhou September propylene futures softened during the week.

In East China and Shandong, local prices fell by CNY 200–300/ton, and Sinopec reduced its benchmark price by CNY 100/ton. Import buyers remained cautious, preferring floating-price deals instead of fixed-price cargoes amid ongoing market volatility.

China's PDH operating rates dropped to around 66% after fresh maintenance shutdowns at major plants, tightening domestic production.

Supply Constraints Continue to Support Southeast Asia

Despite this week's correction, market participants expect Southeast Asian propylene prices to remain relatively firm through August due to limited regional supply.

Lower cracker operating rates, PDH run cuts, maintenance shutdowns, and continued technical issues at Malaysia's PRefChem are expected to keep olefin availability tight. Additional production reductions across Thailand, Singapore, Indonesia, and Malaysia are also likely to support the market.

Industry participants believe the recent decline mainly reflects the sharp correction in crude oil rather than a change in supply-demand fundamentals. Producers are expected to keep operating rates disciplined, as further price declines could squeeze production margins below breakeven.

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