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Propylene glycol: coming out of a low point, fluctuating upwards
2023/8/28
In mid July, the propylene glycol market started to rise from a three-year low. Especially in the second week of August, the market accelerated its upward trend. In this week alone, the average market price of propylene glycol increased by more than 960 yuan (ton price, the same below), ranking first on the list of chemical bulk commodity growth in the Business Society with a weekly increase of 12.55%.
Industry insiders believe that the bottom rebound in the propylene glycol market is mainly driven by the combination of cost and supply and demand fundamentals. Considering the positive factors still present, the probability of propylene glycol in the future market will remain stable.
Three-year low bottoming out and rebounding
In fact, since the beginning of this year, the market price of propylene glycol has always been at the lowest level in three years, and most of the range is at a half of the average price in the same period. "Liaoning propylene glycol dealer Fu Qiang introduced that this situation did not improve until late July, and the market successfully broke through the same period price level in 2022, but it is still below half of the same period price in 2021.
Fu Qiang introduced that since the beginning of this year, the propylene glycol market has shown an overall upward trend followed by a downward trend. In the first two months, due to tight spot supply and good downstream demand, propylene glycol emerged from a round of upward trend supported by both supply and demand. At the end of February, the market average price was 9433.33 yuan, an increase of 27.48% compared to the beginning of the year. However, compared to the market average price of 160.33 yuan in the same period of 2022 and 154.33 yuan in 2021, the year-on-year decline was still 41.16% and 38.88%, respectively.
After March, due to poor downstream demand, the propylene glycol market experienced a weak downward trend. It began to fluctuate and decline from a high of 9666.67 yuan in early March to a low of 7066.67 yuan in mid July, a cumulative decline of 26.9%. This point is also the lowest average price of propylene glycol in the market since 2021, with a decrease of 30.26% and 59.77% compared to the same period in 2022 and 2021, respectively.
The continuous downward trend of the market was reversed in early July, "said Fu Qiang. After a brief bottoming out of the propylene glycol market, due to the shutdown and maintenance of some propylene glycol units, on-site supply decreased, and spot circulation was tight. The market started a strong upward trend, with the focus gradually approaching upwards. As of August 17th, the average market price of propylene glycol was 9100 yuan, an increase of 28.77% from the low point of the year. Especially in the second week of August, it rose by nearly a thousand yuan in a week, reaching a growth rate of 12.55%.
Pressure accumulates and rebounds violently
For the surge in the propylene glycol market, Wang Ningning, an analyst at Jinlian Chuang Chemical, likened it to a spring that has been constantly compressed. When the pressure is strong enough, the rebound will also be rapid and fierce.
Looking at the market trend of propylene glycol in the past two years, it can be seen that the domestic price of propylene glycol in 2023 has significantly decreased compared to 2022, and most of the time it has been operating at a low level. "Wang Ningning analyzed that the recent market situation of propylene glycol raw material - epoxy propane has continued to explore, and the cost pressure of propylene glycol has increased. According to statistics from Business Society, the average market price of epoxy propane on July 17th was 9600 yuan, an increase of 633.33 yuan compared to the beginning of the year; During the same period, the average market price of propylene glycol decreased by 333.33 yuan. The price inversion caused by rising costs and falling market prices has put great pressure on propylene glycol manufacturers, and their willingness to increase prices is strong. At this moment, the market is stimulated by many positive factors, such as the parking of some propylene glycol factories and a reduction in the amount of available cash available for circulation on the premises; Foreign trade export orders have improved, and there is no pressure on manufacturers' inventory; The price of propylene glycol is at a historically low level in recent years, and manufacturers have a strong upward mindset. Under the combined effect of the above factors, the center of gravity of the propylene glycol market has been boosted, and the price has quickly exceeded 9000 yuan in a short period of time.
In August, the propylene glycol plant in Shandong Weiersi shut down, increasing supply. As the available supply of propylene glycol further decreased, manufacturers' reluctance to sell intensified, driving the propylene glycol market into a sharp upward trend.
Li Hao is still lifting the center of gravity
For the future market of propylene glycol, Fu Qiang believes that the propylene glycol market may remain stable despite favorable factors such as costs and supply and demand.
In terms of cost, according to Fu Qiang's analysis, the raw material epoxy propane is supported by both cost and supply side benefits, and the price may fluctuate and rise in the future.
With the production of new production capacity for epoxy propane, the proportion of new processes such as co oxidation and dioxygenated water epoxy propane is gradually increasing. According to statistics from Jinlianchuang, the total production capacity of these two new processes has increased from 47.48% five years ago to 74.73% currently, while the proportion of traditional chlorohydrin process has decreased from 52.52% to 25.27%. The cost of the new process is significantly higher than that of the traditional chlorohydrin method, which has a supporting effect on the market. The epoxy propane market is easily supported by costs and is difficult to fall.
In the future, multiple sets of epoxy propane units have maintenance plans in the near future, involving a production capacity of 540000 tons/year. At the same time, the Jiahong unit has expectations for load reduction, and the Zhejiang Petrochemical unit has shutdown plans. The time period is also concentrated in the near future, with a significant loss in epoxy propane production in mid August. In addition, as the downstream of epoxy propane enters the peak demand season, the overall market mentality has been boosted, and it is expected that the domestic price of epoxy propane may show a climbing trend, providing cost support for the propylene glycol market.
Industry insiders believe that the bottom rebound in the propylene glycol market is mainly driven by the combination of cost and supply and demand fundamentals. Considering the positive factors still present, the probability of propylene glycol in the future market will remain stable.
Three-year low bottoming out and rebounding
In fact, since the beginning of this year, the market price of propylene glycol has always been at the lowest level in three years, and most of the range is at a half of the average price in the same period. "Liaoning propylene glycol dealer Fu Qiang introduced that this situation did not improve until late July, and the market successfully broke through the same period price level in 2022, but it is still below half of the same period price in 2021.
Fu Qiang introduced that since the beginning of this year, the propylene glycol market has shown an overall upward trend followed by a downward trend. In the first two months, due to tight spot supply and good downstream demand, propylene glycol emerged from a round of upward trend supported by both supply and demand. At the end of February, the market average price was 9433.33 yuan, an increase of 27.48% compared to the beginning of the year. However, compared to the market average price of 160.33 yuan in the same period of 2022 and 154.33 yuan in 2021, the year-on-year decline was still 41.16% and 38.88%, respectively.
After March, due to poor downstream demand, the propylene glycol market experienced a weak downward trend. It began to fluctuate and decline from a high of 9666.67 yuan in early March to a low of 7066.67 yuan in mid July, a cumulative decline of 26.9%. This point is also the lowest average price of propylene glycol in the market since 2021, with a decrease of 30.26% and 59.77% compared to the same period in 2022 and 2021, respectively.
The continuous downward trend of the market was reversed in early July, "said Fu Qiang. After a brief bottoming out of the propylene glycol market, due to the shutdown and maintenance of some propylene glycol units, on-site supply decreased, and spot circulation was tight. The market started a strong upward trend, with the focus gradually approaching upwards. As of August 17th, the average market price of propylene glycol was 9100 yuan, an increase of 28.77% from the low point of the year. Especially in the second week of August, it rose by nearly a thousand yuan in a week, reaching a growth rate of 12.55%.
Pressure accumulates and rebounds violently
For the surge in the propylene glycol market, Wang Ningning, an analyst at Jinlian Chuang Chemical, likened it to a spring that has been constantly compressed. When the pressure is strong enough, the rebound will also be rapid and fierce.
Looking at the market trend of propylene glycol in the past two years, it can be seen that the domestic price of propylene glycol in 2023 has significantly decreased compared to 2022, and most of the time it has been operating at a low level. "Wang Ningning analyzed that the recent market situation of propylene glycol raw material - epoxy propane has continued to explore, and the cost pressure of propylene glycol has increased. According to statistics from Business Society, the average market price of epoxy propane on July 17th was 9600 yuan, an increase of 633.33 yuan compared to the beginning of the year; During the same period, the average market price of propylene glycol decreased by 333.33 yuan. The price inversion caused by rising costs and falling market prices has put great pressure on propylene glycol manufacturers, and their willingness to increase prices is strong. At this moment, the market is stimulated by many positive factors, such as the parking of some propylene glycol factories and a reduction in the amount of available cash available for circulation on the premises; Foreign trade export orders have improved, and there is no pressure on manufacturers' inventory; The price of propylene glycol is at a historically low level in recent years, and manufacturers have a strong upward mindset. Under the combined effect of the above factors, the center of gravity of the propylene glycol market has been boosted, and the price has quickly exceeded 9000 yuan in a short period of time.
In August, the propylene glycol plant in Shandong Weiersi shut down, increasing supply. As the available supply of propylene glycol further decreased, manufacturers' reluctance to sell intensified, driving the propylene glycol market into a sharp upward trend.
Li Hao is still lifting the center of gravity
For the future market of propylene glycol, Fu Qiang believes that the propylene glycol market may remain stable despite favorable factors such as costs and supply and demand.
In terms of cost, according to Fu Qiang's analysis, the raw material epoxy propane is supported by both cost and supply side benefits, and the price may fluctuate and rise in the future.
With the production of new production capacity for epoxy propane, the proportion of new processes such as co oxidation and dioxygenated water epoxy propane is gradually increasing. According to statistics from Jinlianchuang, the total production capacity of these two new processes has increased from 47.48% five years ago to 74.73% currently, while the proportion of traditional chlorohydrin process has decreased from 52.52% to 25.27%. The cost of the new process is significantly higher than that of the traditional chlorohydrin method, which has a supporting effect on the market. The epoxy propane market is easily supported by costs and is difficult to fall.
In the future, multiple sets of epoxy propane units have maintenance plans in the near future, involving a production capacity of 540000 tons/year. At the same time, the Jiahong unit has expectations for load reduction, and the Zhejiang Petrochemical unit has shutdown plans. The time period is also concentrated in the near future, with a significant loss in epoxy propane production in mid August. In addition, as the downstream of epoxy propane enters the peak demand season, the overall market mentality has been boosted, and it is expected that the domestic price of epoxy propane may show a climbing trend, providing cost support for the propylene glycol market.
Looking at the supply side of propylene glycol, due to the fact that many sets of equipment have parking and maintenance plans in the early stage, and some early orders still need to be delivered, the market has a more bullish mentality, and multiple positive news areas are concentrated, supporting the market's upward focus. However, considering that after the completion of the initial order delivery, the high price of propylene glycol may be subject to downstream resistance, and the export advantage will gradually weaken. It is expected that the rise of propylene glycol will be limited, and in the short term, the domestic propylene glycol market may continue to operate at high levels within the year.
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