Propylene oxide (PO) values across Asia and Europe continued to face significant pressure in the first week of August 2025, extending the trend of previous months. The market remained weighed down by sluggish buying interest, persistent oversupply, and inadequate upstream cost support from feedstock propylene.
In China, PO prices extended the softness seen last month when values dropped 1.4%. Domestic output increased as Jiangsu Yida Chemical resumed production, while Qixiang Tengda completed overhauls at its 300,000 ton/year facility on August 4, adding an estimated 19,000 tons of fresh supply to the market.
This boosted an already oversupplied market of PO, with high inventories at producers and distributors. Steady imports from Thailand and lower intra-Asia shipping costs increased competition, pushing sellers to cut prices.
PO demand from downstream polyether polyols and polyurethane sectors stayed sluggish, as these industries operated in their seasonal low period. Buyers largely relied on existing inventories, avoiding fresh bulk orders. The slowdown in real estate and infrastructure projects—worsened by heavy rainfall, high temperature, and funding constraints—further reduced offtake in eastern China.
Oversupply, rising storage expenses, and thin processing margins kept spot offers under constant pressure. The entry of additional Asian capacity in the coming weeks is expected to further challenge sellers’ ability to raise prices, leaving PO market sentiment cautious.
Manufacturers also faced tightening cash flows due to the prolonged supply–demand imbalance. Overseas demand from regional importing markets remained weak, offering little relief to domestic producers.
In Japan, PO demand stayed muted as both construction and automotive consumption slowed. Japanese new vehicle sales in July fell 3.6% year-on-year to 390,500 units, weighing on coatings demand. Overseas orders were flat, leaving excess supply in the domestic market. Market participants largely stuck to just-in-time purchases.
In Europe, the summer holiday season, with many participants on holidays, further slowed spot activity in the in the PO market. Construction weakened, with new orders dropping sharply in residential, commercial, and infrastructure sectors.
German industrial output decreased by 1.9% as sluggish regional growth, weak foreign demand, as well as increased competition from Chinese goods weighed on manufacturing confidence. Port congestion at Hamburg, Antwerp, and Rotterdam meant longer delivery schedules, created backlogs in PO inventories, and added a further logistical headache.
PO prices may face further declines as crude oil weakness limits propylene cost support. Seasonal monsoon rains in Asia and summer holidays in Europe are expected to keep construction and polyurethane demand subdued in the coming week.
