Chemicals: Propylene oxide prices rebound

Prices of R22 continue to climb. Last week, the price of R22 increased by 9.52%, maintaining a strong upward trend. The domestic refrigerant market remains robust, with stable supply and continued demand from air conditioning manufacturers during peak season. Market participants remain optimistic about future prospects. However, due to production quota restrictions and sluggish by-product sales, major R22 producers have been operating at medium-to-low capacity, leading to a tighter supply situation. Despite high prices, merchants are still able to secure goods as demand remains solid. While an upward trend is expected in the short term, the potential for significant price increases is limited.

Dichloromethane prices also saw a sharp rise last week, increasing by 10% compared to the previous week. This surge was driven by strong raw material support, a bullish market sentiment among traders, and the seasonal maintenance period for some production units. Several manufacturers are undergoing inspections, which has further tightened supply. With low industry inventory and limited availability in the market, it is anticipated that prices will continue to rise in the near future.

Propylene oxide (PO) prices rebounded last week, climbing by 7.76%. Domestic PO prices rose by over 1,000 yuan per ton, with smooth shipments from manufacturers and a slightly tight supply situation. The recent price increase is attributed to several factors, including maintenance shutdowns at key plants such as Zhenhai Refining and Chemicals, Shandong Xinyue, and Shida Shenghua, as well as temporary disruptions in the Jishen facility. Additionally, a slight recovery in propylene prices has contributed to the upward movement. However, with a large volume of imported PO available in East China ports and potential new supply from Kyrgyzstan, the long-term price growth is expected to be modest.

On the Other hand, glyphosate prices declined last week by 4.80%. The market remained weak, with mainstream prices dropping to 3–3.10 yuan per ton, while offers fell to 3.2–3.35 yuan per ton. Following the cold winter of 2009–2010, the market has become more concentrated, with top producers accounting for around 70–90% of total output. Environmental regulations are gradually tightening, forcing manufacturers to comply with stricter emissions standards. As a result, profit margins have been squeezed, and the outlook for the glyphosate market remains challenging in the short term. A gradual easing in upstream glycine supply is also contributing to the downward pressure on prices.

Last week, chemical product prices remained largely stable. Out of the 118 tracked products, 27 saw declines, 28 experienced gains, and 63 remained unchanged. On a monthly basis, the number of products with rising prices reached 38, while 53 saw declines. Although the chemical industry is in its peak season, demand has not picked up significantly, leading to a mixed performance across the sector.

Looking ahead, trading opportunities in R22 and PO remain attractive. The R22 price rally is fueled by multiple factors, including capacity control, reduced operating rates, restricted ODS sales quotas, and seasonal demand. In the short term, prices may continue to rise, potentially boosting company stock prices. However, other refrigerants like R125 face severe overcapacity and weak demand, making the price transmission logic less effective. As a result, the impact of R22 price increases on listed companies’ actual performance is limited. Investors are advised to proceed with caution.