Propane Market Dynamics Intelligence Report (Recent Updates)

I. Price Trends
1. Domestic Market:
- In May 2026, domestic propane prices continued to rise. As of May 28, the average price in Shandong Province reached RMB 5,488.25 per ton, an increase of approximately RMB 310/ton (or 6%) from the beginning-of-month average of RMB 5,178/ton on May 1.
- On May 11, the national average propane price rose to USD 7,230/ton, up by USD 227/ton (3.24%) from the end of April and by USD 2,557/ton (54.72%) from the end of February.
- Prices experienced minor fluctuations in late May but remained generally elevated; on May 27, the Base Price of Propane published by Shengyisi was RMB 5,393.25/ton.

2. International Market:
- The May 2026 Contract Price (CP) for propane from Saudi Arabia stood unchanged at USD 750/ton compared to April, translating into a persistently high landed cost in China.
- Recurrent geopolitical tensions in the Middle East have tightened international supply, sustaining elevated offshore prices and providing strong support to the domestic market.

II. Supply-Demand Fundamentals
1. Supply Side:
- Domestic Supply: April–May marks the peak period for spring maintenance shutdowns at domestic refineries. Maintenance activities at several plants reduced domestic propane output. Although limited import cargoes arrived in May, overall terminal supply remained tight, with some terminals suspending outbound shipments.
- Import Supply: In April, liquefied propane import volume totaled approximately 1.07 million tons, down 49.86% month-on-month from March. While import volumes showed a modest recovery in May, overall supply remains constrained. Russian natural gas-derived propane imports also tightened in May.

2. Demand Side:
- Fuel Demand: Entering the traditional off-season, baseline fuel demand weakened.
- Chemical Demand: PDH (Propane Dehydrogenation) plant operating rates gradually increased in May. As of the week ending May 8, the national PDH operating rate reached 50.6%, with further upward momentum anticipated. Elevated propylene prices are also providing indirect support to propane markets.

III. Key Market Drivers
1. Cost Support: Sustained high international propane prices continue to underpin domestic pricing via elevated import costs.
2. Supply Tightness: Domestic refinery maintenance and reduced import volumes collectively constrain supply, supporting price gains.
3. Demand Recovery: Chemical demand has bottomed out and is recovering; rising PDH operating rates bolster market sentiment.
4. Geopolitical Factors: Ongoing instability in the Middle East continues to disrupt global supply chains, maintaining offshore prices at elevated levels.

IV. Market Analysis & Outlook
1. Short-Term Outlook:
- Domestic supply remains tight: refinery maintenance is expected to keep domestic production subdued, although the rebound in May import arrivals may provide partial relief to supply constraints.
- On the demand side, seasonal weakening in fuel-related consumption is expected, yet improving PDH operating rates should sustain chemical demand support.
- Elevated import costs continue to anchor the market; propane prices are expected to consolidate at high levels in the near term, with limited upside or downside potential.

2. Medium-to-Long-Term Outlook:
- Overall propane supply in 2026 is projected to grow, primarily driven by import volumes; domestic production is expected to remain relatively stable.
- Chemical demand remains the primary growth engine. PDH capacity expansion continues at a rapid pace; however, profitability and utilization rates of individual units warrant close monitoring.
- A further decline in international crude oil prices could weaken cost support, potentially dampening market sentiment.

V. Forecast
1. Price Outlook:
- Short Term (1–2 weeks): Prices are likely to consolidate at elevated levels, supported by supply constraints and resilient chemical demand, with minimal volatility.
- Medium Term (1–3 months): Prices may ease slightly if import supplies recover adequately; conversely, persistent supply shortages could sustain high prices.
- Long Term (6+ months): Price trajectory will hinge on international crude oil price trends, PDH operating rates, and downstream product profitability—overall, a trend of volatile upward movement is anticipated.

2. Market Risks:
- Geopolitical Risk: Escalating Middle East tensions could severely disrupt global supply, triggering sharp price volatility.
- Demand Shortfall Risk: Slower-than-expected growth in chemical demand may exert downward pressure on prices.
- Cost Collapse Risk: A substantial drop in international crude oil prices could reduce import costs, weighing negatively on domestic propane pricing.