SunSirs: Rising Against the Headwind of Multiple Bearish Factors—China LPG Market Likely to See Initial Gains Followed by Fluctuation

I. Market Review (Last Week): Prices Rebound from Lows to Hit Recent Highs

According to the latest data from SunSirs, the domestic benchmark price for liquefied petroleum gas (LPG) stood at 6,462.50 RMB/ton on Sunday, August 31, 2026. This represents a 3.19% increase compared to the beginning of the month (6,262.50 RMB/ton), with a single-day rise of 3.19%.

In terms of price trends, the LPG market experienced a significant "V-shaped" reversal last week:

Early to mid-week (August 25–27): The market underwent a correction phase. Influenced by a brief easing of geopolitical tensions and a concentration of vessel arrivals at terminals, spot supplies increased while downstream purchasing remained cautious; consequently, prices slid from 6,292.50 RMB/ton to a low of 6,162.50 RMB/ton.

End of the week (August 28–31): The market staged a strong rebound. Geopolitical concerns reignited and international oil prices strengthened; simultaneously, typhoon-related disruptions reduced vessel arrivals at terminals, alleviating supply pressure. Prices surged sharply, particularly on August 31, breaking through previous highs in one move.

II. In-depth Analysis of Fundamentals

Last week's dramatic price fluctuations were primarily driven by the following core factors:

1. Strong Cost-Side Support (CP Increase):

The Saudi CP (Contract Price) for September was officially released, showing an increase of $5/ton for propane (to $625/ton) and $20/ton for butane (to $660/ton). The converted landed costs in RMB are approximately 6,175 RMB/ton for propane and 6,631 RMB/ton for butane. This modest rise in CP provided a solid cost floor for the domestic market and boosted industry sentiment.

2. Supply-Side Disruptions and Maintenance Expectations:

Short-term disruptions: Typhoon weather affected normal operations at some terminals, leading to a temporary reduction in the volume of spot market circulation. Future Outlook: Although Shandong Changyi Petrochemical and South China’s Zhanjiang Dongxing plan to resume production, North China Petrochemical and Anqing Petrochemical have scheduled maintenance shutdowns. Overall, domestic commercial LPG volume in September is projected to drop to 1.70–1.80 million tonnes; the supply side remains generally tight, providing strong price support.

3. Seasonal Demand Recovery and Holiday Effects:

Chemical Demand: Despite a slight pullback in the post-ether C4 market toward the end of the month, deep-processing margins remain decent and operating rates stable; essential procurement continues to support feedstock gas prices.

Combustion Demand: With the arrival of the "Golden September" peak season and cooling weather, residential combustion demand is expected to rise gradually. Holiday Stockpiling: As the Mid-Autumn Festival and National Day approach, downstream end-users have periodic restocking needs, which will trigger a wave of purchasing activity in early September.

4. Macro and Geopolitical Sentiment:

The international situation is volatile, and crude oil prices are fluctuating frequently. Market sentiment is sensitive to news-driven uncertainty; any development—such as an escalation in geopolitical conflict—tends to be amplified into a driver for price increases.

III. Market Outlook:

Based on the interplay of supply and demand and cost factors, the forecast for the LPG market in September is as follows:

Overall Trend: Initial rise followed by fluctuation.

First Half of the Month (Bullish): Driven by the confirmed increase in September Contract Prices (CP), the start of holiday stockpiling, and expectations for the "Golden September" peak season—combined with anticipated supply reductions due to maintenance—prices are likely to extend the gains seen at the end of this week, shifting the price level higher.

Second Half of the Month (Fluctuation/Correction): Once pre-holiday stockpiling concludes, the market may face profit-taking pressure if international geopolitical tensions ease or crude oil prices retreat. Additionally, while supply remains tight, localized increases in supply in the Shandong and East China regions could limit the extent of price gains.

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