Propylene prices in China surged by 5.6% in late June 2025, despite an 8% drop in feedstock crude oil due to the Iran-Israel ceasefire. This rise was driven by restricted spot supply, increased intra-Asia freight, and plant maintenance during the Dragon Boat Festival, which offset weak downstream polypropylene demand and a cautious market. While Middle East tensions caused some producers to halt exports, supporting prices, the overall outlook for Chinese propylene in July remains weak due to ongoing crude cost pressures and limited downstream activity.
The propylene prices in China experienced a significant uptick in the latter half of June 2025. Despite a more general decline in feedstock crude oil, this increase in propylene reveals particular supply-side and regional factors affecting the monomer.
Key Takeaways:
As per ChemAnalyst, the propylene prices in China are broadly anticipated to remain weak in July 2025, with short-term variations confined to a narrow range due to ongoing cost pressures from declining crude and restricted downstream activity.
In China, propylene prices increased by 5.6% in the latter half of June 2025 when compared with the first half. An increase in plant maintenance due to the dragon boat festival offered some short-term supply-side assistance, which counteracted the prevailing negative outlook.
In Southeast Asia, propylene prices saw an increase, primarily attributed to restricted spot supply. The reintroduction of Chinese-origin raffia offered limited export arbitrage opportunities to the region, further tightening the propylene supply for local polypropylene production.
Shipping costs from China to Southeast Asia also remained elevated in June, creating an added cost burden for importing regions, which indirectly supported higher local propylene prices. Geopolitical tensions in the Middle East, even with the ceasefire, prompted some local producers to halt their export offers of propylene and its derivatives, as they evaluated the effects on their profit margins.
However, the second half of June saw a steep 8% drop in the feedstock crude oil market globally, mostly due to a reduction in geopolitical tensions after the Iran-Israel peace. This de-escalation greatly reduced concerns about Middle Eastern supply disruptions, which helped to cause a sharp decline in crude oil prices worldwide. A decline in U.S. consumer confidence and lower-than-expected demand figures from major nations like the US and China also contributed to the overall decline in energy prices.
In the meantime, market participants exercised caution, with downstream buyers mostly purchasing goods based only on urgent need, suggesting that end users had little need for the final polymer. Additionally, lower off-season demand as a whole tempered the polymer's general market sentiment.
Additionally, trading activity in the Asian market fell even further in the first part of June. The Dragon Boat Festival and other Asian holidays, such as a seasonal slowdown in Malaysia and Indonesia before Hari Raya Haji, had a big influence on this. Due to market players taking time off, these holiday times usually result in lower trade volumes, which lowers the region's overall perception of propylene demand.
