Propylene: Cycles
From $1,600 margins to almost zero
What this tab covers How its prices and margins move: past booms and busts with price levels, the spread or margin that the industry watches, the drivers of the cycle and the metrics to track.Propylene used to be tighter than ethylene because ethane cracking made little of it, which drove the 2012-2021 PDH wave and gave PDH margins above $1,600/t at times. China then built so much PDH and integrated PP that margins collapsed. Today the floor is set by the cash cost of Chinese PDH on imported propane, and the PP-propylene spread is the key signal. Feedstock shocks (US-China tariffs in 2025, Hormuz in 2026) move propane and propylene quickly, but structural surplus caps rallies.
The spread to watch PP minus propylene (China) and propylene minus propane (PDH margin)PP Raffia CFR Far East Asia minus propylene CFR China was $75/t on 7 Nov 2025, against about $250/t needed by integrated and $300-350/t by non-integrated producers (S&P Platts). US PDH variable margins averaged $254/t through Nov 2025.
Booms and busts
- 2011-2014
US shale shifted crackers to ethane and propylene supply fell short, opening the case for PDH. Western propylene traded at a premium to ethylene.
US polymer-grade propylene above 70 c/lb (about $1,500/t) at peaks in 2011-2014 (indicative, ICIS historical)
- 2020-2022
Covid demand for PP in masks and packaging, then the 2021 Texas freeze, kept PDH margins very high.
US PDH variable margins exceeded $1,600/t at times in 2020-2024 (S&P Platts)
- April-May 2025
China raised tariffs on US propane to 34%, then 125%, then cut them to 10% from 14 May. PDH run rates fell and buyers switched to Middle East propane.
US share of China propane imports fell from 60.6% to 31.4% (Jul-Nov 2025, S&P Global)
- H2 2025
Glut deepened as new PDH and crackers started. Prices hit multi-year lows in the US and Europe.
US PGP 23.75 c/lb on 19 Nov 2025 (five-year low); Europe €622.50/t on 23 Dec 2025; China PP-propylene spread $75/t (S&P Platts)
What drives the cycle
- Chinese PDH build-out. About 2.3 Mt/yr more PDH in 2026 alone (ChemOrbis), plus coal and cracker additions, keeps China near self-sufficiency in propylene.
- Propane price and trade policy. PDH cost is mostly propane; US-China tariffs in 2025 and Middle East supply risk in 2026 moved PDH economics.
- Cracker feed slate. Shifts to ethane or closures of European and Japanese naphtha crackers reduce co-product propylene.
- Refinery runs. FCC propylene supply rises and falls with gasoline demand and refinery margins.
Metrics to track
| Metric | Why it matters | Where to track it |
|---|---|---|
| China PDH operating rate | Shows how much marginal capacity is shut | JLC, Mysteel, S&P Global |
| PP-propylene spread CFR China | Margin for integrated PP | S&P Global Platts, ICIS |
| Propane CFR China and Saudi CP | PDH feedstock cost | Argus, Platts |
| US propane and propylene inventories | Were 101.8 million barrels in early Dec 2025, up 15.6% year on year (S&P Platts) | EIA |