U.S. propylene prices dropped 9.5% in mid-October 2025 due to a 3.6% decrease in Brent crude as tensions between U.S. and China trade relations worsened with Trump’s threat of a 100% tariff on Chinese goods. Lower crude oil prices brought down the cost of naphtha production, but sluggish polypropylene demand – with packaging purchases in Q4 flat and converters carrying 30-45 days inventory – dampened the use of propylene. U.S. crude and propane/propylene stocks. US crude inventories increased by 3.5 million barrels to 423.8 million barrels, and propane/propylene inventories climbed 1.9 million barrels, which is 11% higher than the normal level. Although plant outages at Enterprise Mont Belvieu (62,500 TPM), representing well over 100,000 TPM offline, shortages were eased by abundant pre-commitment stocks and 42% import dependency. Port congestion in Houston, Savannah, and Manzanillo (1.38-day waits) also impeded flows, yet Gulf CFR uptake was leisurely and further added to overabundance. ChemAnalyst cautions on volatility, with Iranian sanctions providing a limited counterbalance unless EV-driven polypropylene demand takes off.
Key Takeaways:
U.S. propylene prices kept falling in mid-October, on track for a 9.5% drop, pressured by a large fall in feedstock crude oil benchmarks that added supply-side pressure to the market. Brent crude was down 3.6% and WTI fell 2.1% as U.S.-China trade tensions intensified and OPEC+ decided to raise production.
President Trump’s threat of 100% tariffs on Chinese goods in retaliation for Beijing’s restrictions on exports of rare-earth minerals raised fears of a global economic slowdown, sending crude and propylene, a clean fuel linked to oil, lower in tandem.
Propylene inventories grew during a slowdown in refinery activity, with U.S. commercial crude holdings at 423.8 million barrels, up 3.5 million, and propane/propylene stocks rose 1.9 million barrels to a level 11% higher than historical norms, according to EIA figures.
Downstream, polypropylene demand continued to weaken, with summer softness in packaging restraining propylene pull; Q4 buying for beverage wrappers found support after seasonal summer inactivity, causing converters to keep inventories of 30-45 days and expecting just-in-time replenishment, expanding seller discounts.
Polypropylene spot prices in the downstream weakened amidst oversupply and limited activity in consumer goods. This downbeat streak continued even as U.S. automobile production increased by 3%, as the impact of lightweighting in electric vehicles showed that there is higher use of polypropylene (NEV sales up 4.5% in China, affecting global chains).
Despite the plant shutdown of propylene and port congestion in the USA, the supply of propylene was not affected. The Dow Freeport shutdown (13 days, 66,667 TPM) and Shell's Pennsylvania facility (8 days, 3,750 TPM), combined with the Enterprise Mont Belvieu (3 days, 62,500 TPM) mid-Oct outage, equated to over 100,000 TPM temporarily. Shortages were softened by pre-emptive builds and slower offtake.
Congestion at U.S. ports like Houston (4-6 day waits) and Savannah, alongside Brazil's Santos (up 20% delays) and Mexico's Manzanillo (1.38-day vessel waits, 6-day import dwells), disrupted flows, yet Gulf terminal CFR cargos saw slower uptake, amplifying distribution slack.
ChemAnalyst foresees further volatility ahead, even as Shanghai Cooperation Organisation talks hint at expansions on Iranian sanction rounds, offsetting losses, but U.S. propylene is under pressure from the weakness in polypropylene and the bearish outlook for crude, unless automotive EV transitions accelerate.
