The China propylene market remains firm recently due to perceptions of tight supply ahead of the Lunar New Year holidays. This is because propane dehydrogenation (PDH) facilities and methanol-to-olefins (MTO) facilities suspended operations and reduced production in China.
Several PDH facilities suspended operations owing to deteriorating profitability or turnaround. Several MTO facilities were halted on the back of a shortage of and high costs of feedstocks. In Iran, gas use is restricted, and production and exports of methanol are reportedly reduced.
Further, as naphtha crackers and residue fluid catalytic cracking (RFCC) are undergoing regular maintenance one after another in Japan and South Korea, imports of propylene are limited. In this situation, supply is tight in China.
On the other hand, demand for many derivatives including polypropylene is low and the market remains soft. Under such circumstances, operation rates of PDH facilities and MTO facilities are forecast to remain low in 2026.