Reasonable Feedstock Influences China's Downward Trend in Propylene Glycol Prices

Propylene Glycol prices in China have begun to scale down with the onset of the third week of November due to the reduction in feedstock propylene oxide costs on the back of slow demand and declined orders from end-users industries due to a shortage of input supplies. Additionally, many upstream Propylene Glycol processing companies have had to limit or decrease their production rates due to the crude oil market's deficit over the past few weeks. According to the speculations by market experts, prices will further decrease in the upcoming weeks of November 2022.

This week, the supply chain returns to normal, allowing propylene oxide feedstock to reach its destination. Also, some factories in China whose shipments had been delayed earlier are now released, and the factories are busy filling orders and shipping products. However, Propylene Glycol gradually starts to accumulate in the market due to the slow turnaround of new orders, which creates pressure on the supply side. As a result, Propylene Glycol receives slack support from the supply side.

On the demand side, demand has significantly decreased with the increase in supply. However, the demand for Propylene glycol from the end-user industries that produce cosmetics and pharma products is mainly on immediate use as downstream entities are in a solid wait-and-see attitude. As a consequence, Propylene Glycol over-production becomes less profitable to manufacturers. Therefore, the overall transaction of Propylene Glycol in the Chinese domestic market was flat, due to which some factories have lowered their prices recently to boost demand.

By the end of the third week of November 2022, transactions of Propylene Glycol will decrease further by around 2%. However, the price of this product might settle near about USD 1830/MT on a FOB-Qingdao basis and USD 1750/MT on a Spot Ex-Qingdao basis.

ChemAnalyst anticipates further price reductions for Propylene Glycol through the month's end due to sluggish demand as the global economic recession caused purchaser spending from domestic and international markets on the downward side.