Propylene oxide (PO) prices remained under pressure globally in early March due to weak downstream demand and persistent oversupply. In Asia, prices declined after mid-February as the downstream polyether polyols and polyurethane sectors saw limited consumption. Meanwhile, Europe and the USA faced sluggish demand, with high inventories keeping market sentiment subdued.

PO prices in China weakened after mid-February, driven by low downstream consumption and oversupply. The polyether polyols and polyurethane industries continued to struggle with weak industrial output, limiting procurement. Ongoing capacity expansions and post-Lunar New Year production resumptions added to supply pressure. Although some PO plants, including SK Chemicals in South Korea and Nanjing Jinling Huntsman in China, underwent maintenance, the impact was negligible due to high inventories.

PO supply continued to be high, and cost assistance was not provided by flat feedstock propylene prices. The restart of propane dehydrogenation (PDH) facilities in Northeast Asia added to worries about feedstock excess, which kept the market negative. The fact that Chinese exports fell from 10.7% in December to 2.3% in January and February put additional pressure on prices. A combination of U.S. trade policy and expected tariff hikes is further taxing China's export-based economy.

The Middle East and Asia's petrochemical trade is anticipated to slow as Ramadan gets underway, which would further lower the region's demand of propylene oxide. PO Demand is likely to remain weak until a potential post-Ramadan recovery in April. Meanwhile, US tariff plans targeting vehicle imports may affect key exporters like South Korea and Japan, impacting downstream resin consumption.

With contracting in the commercial, civil engineering, and housing sectors, the Eurozone construction industry declined in the first quarter of 2025. While Germany and Italy also experienced losses, France was the country most affected. PO consumption in important European markets decreased as a result of declining new orders, which further reduced demand for polyurethane-based materials.

A technical issue forced Shell to shut down its Moerdijk propylene oxide/styrene monomer (POSM) plant in the Netherlands, taking 210,000 tons of annual capacity offline. This happened at a time when raw material costs were already rising, adding more pressure to prices. However, weak demand continues to limit the potential for significant price increases.

PO prices in the USA remained sluggish, reflecting weak manufacturing activity and slowing consumer spending. Economic growth indicators pointed to a marginal slowdown, with lower factory output keeping demand muted. Sufficient inventory levels hindered any significant price recovery even in the face of stable supply conditions. Additionally, Major chemical producers, including BASF, Covestro, Huntsman, and Dow, reported year-on-year revenue declines, reflecting reduced global consumption of polyurethane-related products.

In APAC, PO prices may decline further as Ramadan slows petrochemical trade, reducing purchases and demand for phenolic resins. In Europe and the USA, weak downstream demand and inventory buildup are likely to keep prices under pressure, with limited prospects for recovery in the near term.