2025 is a crucial turning point for the Chinese propylene market. After years of rapid expansion, the supply and demand relationship in the industry has undergone a historic reversal, officially entering the stage of “comprehensive surplus” from “tight balance”. Under the dual pressure of releasing production capacity inertia and weak demand growth, the price center of the market has significantly shifted downwards, and the profitability of the entire industry is facing severe challenges.
2025 Core Summary
1. The imbalance between supply and demand has become the main theme: although the annual production capacity growth rate has slightly slowed down, the absolute increment is huge, and the total production capacity is expected to climb to 77.58 million tons. At the same time, downstream demand such as polypropylene (PP), which is the main consumer force, has been weak due to macroeconomic factors, and the supply-demand scissors gap continues to widen. Taking the Shandong market at the end of the year as an example, the mainstream transaction price fell to around 6000 yuan/ton, a significant decline from the high at the beginning of the year.
2. Structural collapse of industry profits: Under the dual pressure of oversupply and high costs, the industry is experiencing widespread losses. Except for the integrated unit that can still maintain a small profit, the independent propylene production unit and downstream industries such as epichlorohydrin and octanol have seen a significant decline in profits. Especially in the production of PP powder, due to its narrow price difference with the raw material propylene, it has been on the brink of losses for a long time, and the operating rate has remained low. There has even been a phenomenon of integrated equipment selling propylene raw materials in reverse, further exacerbating market pressure.
3. Deep adjustment of market structure: Industry concentration is accelerating, and leading enterprises are strengthening their market dominance through scale and integration advantages. There are 15 enterprises with an annual production capacity exceeding one million tons, and CR10 (the proportion of the top ten enterprises’ production capacity) has risen to 25.69%. The market landscape is evolving from “decentralized competition” to “giant dominance”, and small and medium-sized enterprises are facing enormous survival pressure under cost and technological disadvantages. The industry has already begun.
Based on market data and industry evolution logic by the end of 2025, the core theme of the propylene industry in 2026 will revolve around “deep clearance of overcapacity” and “brutal testing of the cost curve”. The following is a quantitative analysis and scenario deduction based on key data.
Core data: Starting from the market situation at the end of 2025
1. Price and Cost Baseline: By the end of 2025, the mainstream transaction price in the Shandong market has fallen to 6000 yuan/ton, which has already broken through the cash cost of most non integrated devices. The downstream PP powder production has been in a long-term loss (with a price difference of only 100-200 yuan/ton), resulting in a long-term operating rate below 10%, forming a strong negative feedback loop.
2. Supply rigid data:
Capacity inertia: It is expected that there will still be 6-8 million tons of new production capacity released nationwide in 2026, and even if the growth rate slows down, the absolute increase will still be huge.
Regional pressure: Taking Shandong as an example, the recent release of production capacity from facilities such as Binhua New Materials (PDH) and Lianhong New Materials (MTO) has increased the local daily output from 32600 tons to 33200 tons, and may further rise to 33700 tons. This’ micro ‘growth of local supply pressure is a microcosm of nationwide surplus.

3. Weak demand data: Except for PP, the profits of major downstream products such as propylene oxide and octanol have significantly decreased by -339.02% and -20.6% month on month by the end of 2025, indicating that the downstream capacity is approaching its limit.
2026 trend quantification deduction: three key dimensions
1. Price range prediction: cost pricing, bottom oscillation
The market price will be determined by the survivor with the highest marginal cost. Combining current data with cost structure:
Price ceiling (strong resistance level): 6200-6300 yuan/ton. This position corresponds to the full cost line of some PDH devices and integrated devices at present. Once the price approaches, profit driven supply will quickly rebound, thereby suppressing prices.
Core oscillation range: 5800-6100 yuan/ton. This range will cover most of the trading time in 2026. A price below 5900 yuan/ton will trigger large-scale production cuts in high cost units, especially MTO units that purchase methanol externally.
Key cost bottom line: 5500-5700 yuan/ton. This range corresponds to the cash cost line of the most cost-effective coal to olefin (CTO) and large-scale integrated facilities in China, and is expected to be the ultimate strong support for prices. If it falls below this line, it will trigger a large-scale production reduction at the industry level, but the probability is low.
2. Prediction of Capacity Clearing Process
The utilization rate of industry capacity will continue to be under pressure. Based on the current industry operating rate of about 65%, the deduction is as follows:
When the price remains below 5900 yuan/ton for 6-8 weeks, it is expected to first cause about 15-20% of the high cost marginal production capacity (including some old refining propylene units and independent MTO units) to experience cash flow depletion, entering a substantial shutdown or permanent exit process.
Based on a total production capacity base of over 77.58 million tons, the capacity scale for passive clearance in the first stage may be between 5-8 million tons. This will be a necessary condition for the market to achieve rebalancing.
3. Industry profitability and structural differentiation
Profit differentiation will further intensify, forming a “dual sky” pattern of “ice and fire”:
Cost characteristics of enterprise types (estimated) Key survival actions for 2026 profit prospects, low cash costs for top integrated enterprises (approximately 5500-5700 yuan/ton), and strong industrial chain buffering. Micro profit to break even. It can be adjusted through downstream product profits to cross the cycle. Counter trend expansion and integration: Utilize the downturn to carry out technological transformation and low-cost mergers and acquisitions.
The cost of independent PDH enterprises is greatly affected by fluctuations in imported propane prices, with cash costs of approximately 5800-6000 yuan/ton. Periodic losses. Profit depends on the ability to manage the price difference between propane and propylene. Ultimate hedging and logistics optimization: Lock in raw material price differences and control single ton costs.
Independent MTO and old equipment have high cash costs (generally above 6000 yuan/ton) and no cost advantage. Deep losses and negative cash flow. Reduce production to save life or permanently exit: Some devices will switch to “on/off” mode until shutdown.
Key Variables and Scenario Analysis

1. The international oil price center has risen significantly to over 90 US dollars per barrel. This will strongly push up the cost of naphtha and derivative routes from the cost side, providing unexpected support for propylene prices. The core range may move up to 6000-6400 yuan/ton, delaying the process of capacity clearance.
2. Slow rebalancing of supply and demand. The price fluctuated throughout the year in the range of 5800-6100 yuan/ton, and high cost production capacity slowly withdrew. The industry operating rate may slightly rebound to 68-70% by the end of the year. This is the most likely path.
3. Macroeconomic demand is further weaker than expected, and new production capacity is concentrated. The price may temporarily drop to the cost bottom line of 5500-5700 yuan/ton, triggering a severe and rapid clearance of production capacity, intensifying industry pains but shortening the adjustment time.
Conclusion
In 2026, the propylene industry will transition from the first stage of “price decline” to the second stage of “capacity clearance”. The market will use the entire year to answer a core question: how much production capacity cannot survive at a price level below 5900 yuan/ton?
For participants, this is no longer a story of pursuing growth, but a severe test of survival and efficiency. Investment and business decisions must be based on refined cost calculations and keen observation of production capacity exit signals. The ultimate recovery of the industry will begin with the continuous news of outdated production capacity being shut down, and this “clearing voice” will become the most noteworthy main theme of the market in 2026.