Propylene Oxide (PO) prices in the United States declined by around 4% in early March 2026 after recording a notable increase during February. The correction followed softer cost support from feedstock propylene and rising domestic inventories, prompting PO buyers to seek concessions after several weeks of firm pricing.
The early-March price decline was largely linked to weaker feedstock propylene costs. According to the International Energy Agency report released on March 4, 2026, propylene inventories increased by 0.8 million barrels during the week and were reported at 54% above the five-year seasonal average. Total commercial petroleum inventories also increased by 2.9 million barrels, highlighting comfortable supply conditions in the domestic energy market.
Despite the recent decline, propylene prices had remained elevated during February due to rising crude oil benchmarks. Escalating geopolitical tensions between the United States and Iran had pushed global oil prices higher, raising feedstock costs across several petrochemical chains including PO. This earlier cost pressure played a key role in lifting PO prices during February before the early-March correction emerged.
Manufacturing conditions in the United States also influenced market dynamics. The US manufacturing sector continued to expand in February, although the pace of growth slowed compared with previous months. Production and new orders increased only modestly as manufacturers faced challenges including adverse winter weather, higher operating costs, and ongoing trade disruptions.
Trade factors also affected demand momentum. Export shipments from US manufacturers declined for several consecutive months, particularly to neighboring markets. Tariffs and other trade policy measures continued to increase input costs and reduce export competitiveness, which weighed on broader industrial demand including PO.
PO demand from downstream polyurethane and polyether sectors remained relatively weak. These sectors rely heavily on construction activity, which has slowed in recent months. As a result, procurement from PO-consuming industries remained cautious, limiting stronger price support.
The US construction sector continued to face several structural challenges. Labor shortages pushed wages higher and increased project costs for contractors. Stricter immigration policies and workforce constraints further tightened labor availability, while uncertainty surrounding trade policies delayed investment in new factories and commercial developments. Although recent interest rate cuts offered some support, borrowing costs remained relatively high, limiting large-scale construction expansion.
As per the Chemanalyst data, PO prices are likely to increase again in the coming months due to rising upstream crude oil prices linked to the ongoing Iran conflict. Energy disruptions and shipping risks around the Strait of Hormuz are tightening global supply chains and pushing oil and natural gas prices higher. These factors may increase propylene feedstock costs and lift PO production expenses, potentially driving another upward price cycle once inventories begin to normalize.
