According to the Commodity Analysis System of Business Society, the propane market in 2023 experienced a roller coaster trend, with a brief rise in the first half of the year before entering a downward channel. After rebounding at the bottom of the second half of the year, it began to fluctuate within the range until the end of the year. On January 1st, the average price of propane in Shandong was 5082 yuan/ton, and the year-end average price was 5618 yuan/ton, with a year-on-year increase of 10.54%. The lowest point of prices for the whole year occurred in early July, a decrease of 25.61% compared to January 1st

In January, the domestic propane market had a good start, with an overall improvement compared to the end of 2022. At the beginning of the month, due to the low prices in the early stage, enterprises effectively destocked, and after the holiday, downstream began to replenish goods in stages, resulting in a significant increase in demand. At the same time, the recent low volume of ships arriving at ports has led to a decrease in market supply, and propane prices have begun to rise strongly. The market started to sharply decline in February, as propane prices rose to a high level and downstream follow-up was slow, leading to resistance. Coupled with the continuous decline in CP prices, it suppressed the mentality of business owners. The peak season for downstream chemical and combustion demand has passed, and some chemical products have been affected by high cost, resulting in reduced profits and a decrease in demand. The continuous decline in propane prices continued until the end of June. In the second half of the year, as prices fell to a low level, downstream buyers entered the market on dips, and the propane market entered a price increase trend earlier than in previous years. Market purchases and sales improved, while import prices stopped falling and rose, jointly helping to increase propane prices. Starting from September, the traditional peak season began. Due to the early depletion of favorable conditions in the early stage, downstream PDH units had a longer loss cycle, with low operating levels. Propane stabilized from rising, and then prices fluctuated within the 5200-5600 range due to supply and demand contradictions, continuing until the end of the year.

According to the monthly K-bar chart of Shandong propane in 2023, the increase in January was as high as 26.71%, followed by a gradual increase in decline. In the second half of the year, there was a significant rebound, and after the rebound, the increase gradually decreased. In the peak demand season in October, it even fell, and then began to stabilize.

From the trend of propane prices in the past three years, it can be seen that propane prices reached their lowest point in nearly three years in July 2023, and then began to rebound strongly. The upward trend appeared relatively early. It is reported that there was a significant increase in October 2012, with an increase of over 20% compared to September. Saudi Aramco’s CP in October announced that propane was $800/ton, an increase of $135/ton from the previous month; The onshore cost of propane is equivalent to 6175 yuan/ton, and the significant increase in CP directly drives the rise in domestic propane prices.

In 2023, CP prices showed a V-shaped trend, with the highest point appearing at 790 yuan/ton in February and the lowest point appearing at 400 yuan/ton in July. Prices stabilized from October onwards. From the trend of domestic propane, the price gradually fell in the first half of the year, increased first and then stabilized in the second half of the year. The lowest point of the price also appeared in July, indicating that the price of international imported propane has a direct impact on the domestic market price.

Market forecast: From a cost perspective, crude oil, as an indirect upstream of propane, showed a divergence in its trend in October 2023. Oil prices began to fluctuate and fall in late October, while propane fluctuated at a high level until the end of the year under the support of the peak combustion demand season. The price of crude oil still largely affects the trend of propane, and we closely monitor the international oil price trend in 2024. From the perspective of demand, as the main downstream PDH device, the industry has been operating at a loss since August 2023, with less than 70% of the industry’s overall production capacity. It is expected to add about 10 million tons of new production capacity in 2024. In the current competitive landscape of the industry, it is difficult for all PDH devices to be put into operation as scheduled next year. Moreover, it is not difficult to see from the propane demand market in 2023 that high prices suppress demand, and there is significant resistance to price increases, making high prices short-lived. Therefore, opportunities and challenges coexist in the propane market in 2024. Under the multiple influences of internal and external factors, it is expected that the center of gravity of propane prices may continue to decline compared to 2023. Taking the Shandong market as an example, it may fluctuate within the range of 6000-8000 yuan/ton in 2024, with a high-frequency fluctuation range of 6800-7300 yuan/ton and an annual average price around 7200 yuan/ton. It is expected that the market price will have a low point in the first quarter and a high point in the third quarter.