After the Spring Festival, factories across China gradually resumed operations, and news of a price hike in propylene oxide from the chemical market began to draw widespread attention. According to Baichuan Information, as the holiday season ended, major propylene oxide producers started to increase their quotations. Following general price adjustments in Shandong, South China, and East China last week, Wanhua Chemical and Tianjin Daxie continued to raise their prices on February 26.
Long Yao Petrochemical analyst Cheng Yao told reporters from the *Daily Economic News* that the recent price surge is closely linked to supply-demand imbalances in the market. Last year, environmental regulations significantly reduced the industry's operating rate to around 75%, with temporary supply cuts adding to the tension. Market speculation further fueled the upward trend in ethylene oxide prices.
Propylene oxide is primarily used in the production of polyether polyols, which are key raw materials for white foaming agents in refrigerators. The price increase has pushed up the cost of these materials. Additionally, black foaming materials—commonly known as polymeric MDIs—also saw significant price hikes last year, putting even more pressure on domestic refrigerator manufacturers.
As an essential basic chemical, propylene oxide is widely used in the production of polyether polyols and propylene glycol, with the former being a critical component in polyurethane foam manufacturing.
According to Baichuan Information, on February 26, Wanhua Chemical raised its propylene oxide price to 12,900 yuan per ton, while Tianjin Daxie reported a range of 12,400–12,500 yuan per ton. Data from Longzhong Petrochemical showed that the mainstream price in Shandong and South China was 12,400–12,500 yuan per ton, while East China ranged between 12,700–12,800 yuan per ton. Cheng Yao noted that the price increase began on February 22, rising by 100 yuan per ton on both February 22 and 23.
Cheng explained that the price rise is mainly due to supply constraints. The chlorohydrin method, the primary production technique for propylene oxide, is environmentally harmful, and stricter regulations have led to production disruptions. Additionally, high profit margins have attracted speculative activities in the market.
In 2017, propylene oxide prices had already seen a sharp increase. Binhua Shares (601678) reported that the average selling price of its propylene oxide products rose from 7,710.95 yuan per ton in 2016 to 9,080.61 yuan per ton in 2017—a 17.76% increase.
Looking ahead, Cheng believes that propylene oxide prices may still rise in early March. With the resumption of terminal enterprises, demand is expected to grow, and current manufacturer inventories are relatively low. In the medium to long term, several major producers will undergo maintenance in March and April, leading to a potential supply reduction.
**Refrigerator manufacturers under pressure**
The price hike in propylene oxide has also impacted downstream industries. Foaming materials in refrigerators are divided into "black" and "white" materials. White materials refer to polyethers, while black materials are typically polymeric MDIs. These foams are used for insulation between the inner and outer layers of refrigerators.
Propylene oxide, as a raw material for white materials, has directly affected refrigerator manufacturers. Meiling Electric’s 2017 performance forecast indicated a net profit drop of 77.30% to 97.73%, largely due to the sharp increase in raw material costs such as steel, isocyanate, and combined polyether, which rose by over 60%.
Zhu Wenjie, a securities affairs representative at Meiling Electric, confirmed that isocyanate and combined polyether correspond to black and white materials. During the interview, it became clear that the price increase in black materials had a more severe impact on the industry, leading to a period of concern known as “talking about black change.â€
In August and September 2017, Wanhua Chemical announced two consecutive price hikes for aggregated MDI, raising its distribution prices. Oma Electric Refrigerator Division’s deputy general manager, Yao Youjun, noted that foaming material prices surged dramatically last year. At the start of 2016, the price was around 10,000 yuan per ton, but by 2017, it reached as high as 40,000 yuan per ton—nearly tripling. A single refrigerator requires approximately 4 to 5 kg of foaming material.
Due to the rising costs of black and white materials, companies like Meiling and Oma raised their refrigerator prices in 2017. According to data from Aowei Cloud (AVC), offline refrigerator prices increased by about 15%, while online prices rose by around 10%. Overall, the industry’s average price increased by 4% to 5%.
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