# Propylene oxide: Cycles

From a 2021 furniture boom to a Chinese glut

Source page: https://www.materialinsights.org/chemicals/propylene_oxide/cycles/

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.

PO prices cycle with polyurethane demand (furniture, construction, cars) and with co-product markets for styrene and MTBE. China's rapid additions since 2020 turned the cycle downward: prices peaked in 2021 when Chinese demand for foam and appliances surged, then fell as capacity doubled. The floor is the cash cost of integrated HPPO and PO/SM; the ceiling is set by outages and the chlorohydrin phase-out.
 The spread to watch **PO minus propylene (China)**

PO price minus about 0.8 x propylene minus oxidant cost; in late 2025 with PO near $1,130/t and propylene in the $700s/t the gross spread was roughly $500/t before oxidant and fixed costs (indicative).

#### Booms and busts

1. 2020-2021

Post-Covid surge in furniture, mattresses and appliance demand; US Gulf freeze shut plants in February 2021.

China PO above CNY 18,000/t (about $2,800/t) in early 2021 (indicative, Chinese market reports)

2. May 2024 - June 2025

New Chinese capacity and weak construction demand.

PO prices fell about 23% to about $1.005/kg in June 2025 (Alchempro)

3. July - October 2025

Maintenance and selective cuts lifted prices despite weak demand.

about $1.13/kg in early October 2025, up about 12% (Alchempro)

4. H1 2026

Prices hit an annual high in January on tight supply, then swung; new capacity and weak demand expected to drag H2 2026.

levels not published (Mysteel headlines, Jan and Jul 2026)

#### What drives the cycle

- **Chinese capacity additions.** China added 1.5 Mt/yr from mid-2025 and plans more in 2026-2028.
- **Polyurethane demand.** Furniture, bedding, insulation and cars drive polyol demand.
- **Co-product markets.** Styrene and MTBE prices change PO/SM and PO/TBA economics.
- **Environmental policy.** China's phase-out of chlorohydrin removes high-cost supply.

#### Metrics to track

| Metric | Why it matters | Where to track it |
|---|---|---|
| **China PO ex-works price (Shandong)** | Main benchmark | Mysteel, SunSirs, OilChem |
| **Polyol prices** | Downstream demand signal | ICIS, ChemAnalyst |
| **Styrene and MTBE margins** | Co-product credits | ICIS, Platts |

## Other sections

- [Summary](https://www.materialinsights.org/chemicals/propylene_oxide/index.md)
- [Overview](https://www.materialinsights.org/chemicals/propylene_oxide/overview/index.md)
- [Correlation](https://www.materialinsights.org/chemicals/propylene_oxide/correlation/index.md)
- [Production route](https://www.materialinsights.org/chemicals/propylene_oxide/routes/index.md)
- [Production](https://www.materialinsights.org/chemicals/propylene_oxide/production/index.md)
- [Feedstocks](https://www.materialinsights.org/chemicals/propylene_oxide/feedstocks/index.md)
- [Trading](https://www.materialinsights.org/chemicals/propylene_oxide/trading/index.md)
- [Movement](https://www.materialinsights.org/chemicals/propylene_oxide/movement/index.md)
- [Regulation](https://www.materialinsights.org/chemicals/propylene_oxide/regulation/index.md)
- [Characteristics](https://www.materialinsights.org/chemicals/propylene_oxide/characteristics/index.md)
- [Emissions](https://www.materialinsights.org/chemicals/propylene_oxide/emissions/index.md)
- [Relationships](https://www.materialinsights.org/chemicals/propylene_oxide/links/index.md)