Production Halt at a Key Propylene Glycol Facility in China Induces a Steep Rise in Spot Prices

With the approaching Beijing Olympics in February first week and increasing Omicron variant spread in China, the demand for Propylene Glycol in the downstream paint & coatings sector, food sector and the pharmaceutical industry have risen significantly causing the Chinese Propylene Glycol market to exhibit raised sentiments since mid-December. According to the ChemAnalyst database, the last assessed prices for propylene glycol hovered around USD 2887/MT FOB Qingdao.

A sudden surge in the spot prices of Propylene Glycol at Chinese ports has recently been encountered due to the tightness in propylene glycol supplies. For instance, the export prices to European clientele have recently seen a hike of over 20%. The shortage in supplies arose from the temporary halt in production facilities of a key market player Shandong Yija Petrochemical Sales Co. Ltd. for maintenance purposes. The prolonged supply shortage has caused the traders to grapple for the procurement of substantial propylene glycol stocks, consequently paving way for higher price revisions in the offered contracts. A key reason that has compelled the buyers to procure Propylene Glycol at premium prices is the resurgence of coronavirus cases in Asia, Europe, and the USA. In the fight to restrain COVID19 cases, the respective governments in these countries have mounted huge pressure on the pharmaceutical sector leading it to showcase a positive market outlook. Hence, an astonishing increase in the number of enquiries for Propylene Glycol, which is applied as a solubilizer and stabilizer in drug formulations, is being observed lately.

As per ChemAnalyst, the global propylene glycol market is again undergoing turmoil owing to the regain in upstream crude oil prices backed by curtailed output due to unrest in OPEC+ members Libya and Kazakhstan. On top of that, the rising coronavirus cases have restricted logistic activity while surging the demand from pharmaceuticals to a new high. Hence, the Propylene Glycol prices in China market is expected to stay high in the upcoming weeks. A small relief in prices during the last week of January may be observed with traders opting to clear their stocks before the approaching Chinese New Year, however, the prices are anticipated to bounce back on supply shortage and raised queries post the two-week production halts in China during the festive period in early February.