In the first half of March, the price of industrial grade propylene glycol surged rapidly due to the resonance of the skyrocketing cost of epichlorohydrin, the urgent export demand of polyether, and the tight supply of spot goods; With the rise and fall of raw materials and the end of rushing orders, the market has now entered a stage of digestion and adjustment.
According to the Commodity Market Analysis System of Shengyi Society, as of March 12th, the average production price of propylene glycol in Shandong Province was 7300 yuan/ton, a significant increase of 22.01% compared to the beginning of the month.
driving factors
Cost side: Epoxypropane surged strongly, but recently surged and fell back
The raw material propylene oxide (PO) has seen a significant increase since early March. On March 12th, the reference price for PO in Shengyi Society was 10350 yuan/ton, an increase of 29.38% compared to the beginning of the month.
The sharp rise in international crude oil prices, the upward trend in propylene prices, and the partial decrease in PO units have led to a dual tightening of costs and supply. The cost pressure on propylene glycol enterprises has sharply increased, forcing them to significantly raise their quotations, becoming the core driving force behind this round of market trends. Yesterday, the PO market experienced a broad decline and entered a temporary period of consolidation.
Supply side: tight spot prices combined with manufacturers’ reluctance to sell, driving strong upward sentiment
The overall stability of the Shandong plant is high, but the spot circulation is tight, and some factories are reluctant to sell and hold back, exacerbating market tension. Due to low inventory levels in the early stage and rising costs, manufacturers have a strong willingness to push up prices, resulting in a continuous upward trend in quotes.
On the demand side: The last bus of tax refunds is concentrated in large quantities, and downstream high price resistance is evident
Polyether export rush: Affected by the cancellation of the export tax rebate policy for polyether polyols starting from April 1st, in the first half of March, the polyether factory maintained a high level of production to lock in tax rebates and concentrate on rushing export orders. The purchase of PO and propylene glycol for essential needs significantly increased, becoming the core driver of demand.
Limited domestic demand follow-up: industries such as unsaturated resins and coatings have seen a rebound in demand, but after rapid price increases, downstream resistance has quickly emerged, with low acceptance of high prices and light actual trading. Procurement is mainly focused on maintaining demand, limiting the room for growth.
Subsequent expectations weaken: After mid March, rush orders will basically end, and the operating rate of polyether may decrease. Propylene glycol procurement will return to rationality and small orders according to demand, and the demand side will shift from increasing to decreasing.
outlook for the future market
In the second half of March, the propylene glycol market will shift from a “unilateral rise” to a high-level decline and range oscillation pattern.
On the cost side, the rise and fall of epoxy propane have weakened the support for costs;
On the supply side: stable operation of the equipment, gradually loose availability of spot goods, and increased willingness of manufacturers to ship;
On the demand side, the rush for polyether tax refunds has ended, and there is a lack of follow-up in domestic demand, showing an overall trend of first increasing and then decreasing.
It is expected that the price of propylene glycol will experience short-term pressure and fall, entering a period of consolidation and oscillation. The focus will be on tracking the trend of epoxy propane, changes in polyether production, and the speed of factory inventory accumulation.
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