Propylene carbonate prices in the USA kept declining through the end of May, representing the fourth consecutive week of weakness. The most recent drop mimics a 1.5% decline in China and reflects a more normal trade flow since the tariff agreement between Washington and Beijing on May 12.

In the U.S. Gulf and Midwest, market participants noted that the spot price of propylene carbonate fell another 1-2% by the end of May, weakened by low-priced imports from China and South Korea. Both countries remain the leading suppliers to the U.S. in propylene carbonate, and China is the clear leader in battery-grade volumes.

The ongoing weakness in propylene carbonate prices is primarily from upstream developments in China. In April, Chinese propylene carbonate producers stepped significantly down in their operating rates to around 53-55% and cut production to match sluggish offtake. Despite a slight increase in electrolyte production in China, caution on demand and weak restocking have continued to put downward pressure on the prices of propylene carbonate.

With their production costs even lower and feedstock prices down, producers have been able to cut prices further without risking already thin margins. Much of this discounted material has gone to other parts of the world, including the U.S.

Trade conditions also improved substantially, when the U.S. and China agreed to temporarily lower their tariffs to 10% for 90 days, and reversed the steep duties that had stalled trade with the U.S. In addition, a reduction in ocean freight rates incentivized lower overall costs. The latest data confirmed that Asia-to-U.S. West Coast freight dropped 13% from mid-April, and freight is more than 30% lower than a year ago.

While the circumstances are favorable, demand in the U.S. is still not back to pre-pandemic levels. Total EV registrations were up 11% year-on-year in Q1 2025 at just short of 300,000 units, still supporting a reasonably steady intake of battery-grade propylene carbonate to electrolyte manufacturers. Most battery pack assemblers continue to limit purchases to immediate capacity on hand, awaiting clearer direction on future federal EV subsidies before committing significant volume purchases.

Demand for propylene carbonate from coatings and specialty chemicals remains price-sensitive outside of batteries. The tightening of EPA environmental regulations and corporate sustainability targets are slowly replacing harsher solvents with propylene carbonate, however.

Looking ahead, ChemAnalyst continues to project a marginal recovery in the near term. Import supply chains remain well stocked and Chinese producers will likely keep export pricing competitive to maintain utilization rates. Barring any significant increases in crude-derived propylene or if the tariff exemption expires in August without renewal, propylene carbonate prices in the U.S. are anticipated to remain soft throughout the summer.