Subtle Price Rise in Propylene Reflects Strong Demand in Key Global Industries

In the first week of October 2023, the US market observed a subtle rise in the price of Propylene (Polymer Grade), mainly attributed to an upsurge in demand within the Polypropylene and Propylene Glycol industry sectors—this increase in demand points to positive economic activity in these sectors, reflecting the current industrial landscape.

The uptick in Propylene prices can be linked to a surge in demand within the Polypropylene and Propylene Glycol sectors. This demand indicates robust economic activity within these industries, highlighting the current state of the industrial landscape. Additionally, a significant increase in new vehicle sales in the US was noted during the same period, underlining strong consumer demand for the latest models and improved supply conditions. Notably, General Motors continued its impressive streak with a substantial 21% uptick in US sales, reaching a total of 674,336 vehicles. This success can be attributed to the persistent demand for their pickup trucks, budget-friendly crossover SUVs, and the growing appeal of electric vehicles. In the electric vehicle segment, sales experienced a remarkable 28% surge during the third quarter compared to the previous one, highlighting the ongoing shift towards more sustainable transportation options. Despite concerns stemming from the United Auto Workers (UAW) union's coordinated strike against the Detroit Three automakers, which raised apprehensions about supply disruptions in the current quarter, the overall US new vehicle sales in September remained robust, achieving 1.33 million units, the annual sales pace stands at 15.67 million units. This performance underscores the resilience and adaptability of the end-use automotive industry, even in the face of challenging labor disputes and supply chain disruptions.

During the same week, the European Propylene market experienced a significant uptick in Propylene prices, largely influenced by a parallel surge in overseas markets, most notably in the United States. Europe heavily relies on importing its Propylene from the USA, and within the same time frame, the price of this vital commodity in the US market increased by approximately 2.5%. The driving force behind this price trend can be attributed to the robust demand for Propylene on the international stage, particularly within the PolyPropylene (PP) industry. The surge in demand for downstream PP products played a pivotal role in propelling the market during this period, further catalyzed by the escalating momentum of the European electric car revolution. This confluence of factors has left a lasting mark on the European Propylene market.

This week in the Chinese Propylene market, remarkable stability in the price of Propylene was observed, largely attributed to a delicate equilibrium between supply and demand. However, export orders experienced a marginal decline, although this decline was the softest it had been in three months, suggesting a potential turnaround. On the employment front, there was a decline, largely driven by cost-cutting measures and the decision not to replace voluntary leavers. Interestingly, the backlog accumulation remained relatively unchanged from the previous month and remained at marginal levels. Meanwhile, purchasing activity saw a rise, reflecting improving conditions within the supply chains, which could signal positive momentum in the coming weeks.