Propylene oxide (PO) prices remained under pressure globally in the first week of February 2025, as ample supply, sluggish demand, and limited cost support from feedstock propylene continued to impact the market. The Lunar New Year holiday in APAC further dampened trade, while seasonal slowdowns in Europe and North America restricted market movement. With cautious procurement strategies and high inventories, PO prices are expected to remain subdued in the near term.

The global PO market continues to struggle with oversupply, as capacity expansions in China in few months intensify competition and limit price recovery. The addition of new units utilizing hydrogen peroxide propylene oxide (HPPO) and co-oxidation (CHP) processes further intensified supply pressures, keeping prices at low levels. Meanwhile, Northern Huajin secured a Solvay technology license for a 300,000-ton PO project, and Guangxi Chlor-Alkali began full-scale construction of a 300,000-ton HPPO and polyether polyol project, scheduled for completion in 2026. These expansions, coupled with muted global demand, are contributing to a continued bearish market sentiment.

In China, PO prices remained weak due to softened demand in the downstream polyether polyols and polyurethane sectors, as well as oversupply from increased production capacity. The Lunar New Year holiday further slowed market activity, with many PO plants shutting down for maintenance or operating at reduced rates, lowering industry-wide production levels. Chlorohydrin-based PO facilities continued operating at lower capacities, while Zhejiang Petrochemical remained offline during lunar year. High inventory levels kept downward pressure on prices, as buyers remained hesitant to engage in bulk procurement.

In Europe, PO demand remains weak, particularly in residential construction, where fewer new projects have reduced the downstream polyether polyols and polyurethane consumption. High building costs have dampened activity, and subcontractor rates continue to decline, reflecting low industry demand.

Similarly, in North America, PO prices remain under pressure due to seasonal slowdowns and supply constraints. While maintenance shutdowns recently at LyondellBasell’s Texas facility have tightened supply, downstream demand for polyether polyols and polyurethane remains weak, limiting any significant price recovery.

Meanwhile, PO producers LyondellBasell and Dow reported net losses in their Q4 2024 earnings, reflecting continued market challenges. LyondellBasell posted a $603 million loss, citing high natural gas and NGL costs, weak margins, and sluggish demand in Europe and Asia. Dow’s report highlighted weak polyurethanes (PU) demand, impacted by declining housing and automotive production in the USA and Europe, further restricting consumption growth and maintaining a bearish market outlook.

As per ChemAnalyst, addition of PO capacities, combined with macroeconomic uncertainties and volatile upstream feedstock markets, is further exacerbating market instability, limiting price recovery, and maintaining a bearish outlook.