Demand off-season, narrow adjustment of propane Market in August

Price Trend

In August, the propane market was mainly narrowly adjusted. At the beginning of the month, the average market price of propane was 3615 yuan/ton, and at the end of the month, it was 3692.5 yuan/ton. The average price of propane rose by 2.14% in the month, which was 31.06% lower than that of the same period last year.

II. Analysis of Influencing Factors

Products: Propane price shocks this month, the market atmosphere is general. As of August 30, propane from Dongming Petrochemical Company of Shandong Province has been stopped for self-use and no quotation has been offered for the time being. The ex-factory price of propane in Tianjin Bohai Chemical Industry Group is 3600 yuan/ton, Shandong Haiyou Petrochemical Group is 3700 yuan/ton, Shandong Huifeng Petrochemical Company is 3750 yuan/ton, Shandong Hengyuan Petrochemical Company is 3720 yuan/ton, and Shandong Binzhou Dayou Group is 3700 yuan./ The ex-factory price of propane in Shandong Zhonghai Fine Chemical Co., Ltd. is 3700 yuan/ton. The ex-factory price of propane in Shandong Yuhuang Shengshi is 3630 yuan/ton. The ex-factory price of propane in Qingdao Refinery and Chemical Co., Ltd. of Sinopec is 3400 yuan.

Industry chain: The narrow adjustment of liquefied petroleum gas (Shandong market) shocks in August is dominant, and the international crude oil price still has a greater impact on the liquefied petroleum gas market this month. In early August, liquefied petroleum gas prices continued to be low, downstream risky mentality into the market was positive, manufacturers shipped more smoothly, inventory pressure, and then pushed up. However, limited by the decline in international crude oil, the increase is not significant. In mid-August, the typhoon affected the production and transportation of the manufacturers, blocked shipment for several days in a row, and prices fell. Subsequently, the weather gradually weakened, shipments returned to normal, inventory was eased, and international crude oil pushed the market higher. But shipments have improved for a short time, although the traditional sales season is approaching, but demand is limited, coupled with the expected fall in September CP, downstream bearish on the future market, the enthusiasm for entering the market has faded. The shipment of the manufacturer returned to flat again, and the price fell again at the end of August. Until September CP was introduced, propane had declined but less than expected, alleviating market mentality and rising prices slightly.

In August, the price of propylene market declined sharply, fluctuations were still frequent, with a total of three peaks and troughs. Polypropylene powder, butyl octanol and propylene oxide are still profitable, customer procurement is positive; in August, the domestic acrylic acid market rose by 3.04%, which is good for the propylene market; epichlorohydrin began to oscillate downward, with a monthly decline of 23.28%, a monthly amplitude of 28.63%, and the recent market is mainly consolidation, or for the propylene market. Propylene prices have a negative impact.

The propane Market as a whole rose slightly in August, mostly due to shocks. At the beginning of this month, CP price was introduced in August, propane slightly fell, which brought bad news to the market. In addition, the international crude oil fell sharply on August 2, which affected the market mentality. The enthusiasm for entering the market downstream was not high, the manufacturers’shipments were not smooth, and the main focus of propane price was to let profits drain away from the warehouse. But in mid-August, with the sustained upward trend of international crude oil, propane market was boosted, downstream market entry enthusiasm improved, manufacturers shipped smoothly, inventory pressure was not high, and prices stopped falling and rebounded. But August is still the traditional off-season of demand, the contradiction between supply and demand is prominent, coupled with the anticipated fall of CPs in September, the price rise is blocked. Until the end of August, when the CP price was introduced in September, propane dropped slightly compared with last month, but the decline was less than expected. The market mentality was supported and the price rose slightly.

Saudi Amy Corp. announced in September that the price of propane was lowered and the price of butane was flat. Propane was $350 per ton, down by $20 per ton from last month; butane was $360 per ton, flat from last month. The cost of long-term approximate cargo propane converted to onshore is around 3 022 yuan/ton and that of butane 3100 yuan/ton.

Industry: According to the price monitoring of business associations, in August 2019, there were 37 commodities rising annually in the chemical sector, of which 15 commodities increased by more than 5%, accounting for 17.9% of the monitored commodities in the sector; the first three commodities were hydrogen peroxide (39.93%), acetic acid (20.90%) and butadiene (14.47%). There are 39 kinds of products with a decline of more than 5%, accounting for 15.5% of the monitored products in this sector. The products with the first three declines are yellow phosphorus (-27.58%), epichlorohydrin (-23.28%) and sulfur (-19.38%). This month’s average rise and fall was 0.03%.

3. Future Market Forecast

Propane analysts at business associations believe that although the atmosphere is not good in August, demand will increase in September compared with August as the weather gets colder. With the expectation of “gold, nine silver and ten silver” in the traditional sales season, September is expected to reverse the situation and prices will gradually rise.