Propionic Acid prices in the Asia’s market maintained an overall firmness during the month of July 2024, driven by curtailed supplies amidst high demand. The increased need for food preservatives during the summer season boosted overseas demand. According to customs data, China’s exports exceeded expectations, growing by 7.6% year-on-year compared to the forecasted 6%, indicating strong international demand. Additionally, high domestic consumption for Propionic Acid influenced pricing, with China being a major exporter. Elevated crude oil prices, spurred by OPEC+ production cuts and increased US summer fuel demand, further escalated production costs. Geopolitical tensions in the Middle East and severe weather events in North America have also supported the bullish sentiment in the oil market, contributing to the upward trend in Propionic Acid prices.

China’s manufacturing sector experienced significant expansion in mid-2024, achieving its fastest growth in two years. This growth was supported by robust output and increasing demand for consumer goods, despite challenges such as delayed supplier logistics due to extreme weather. The surge in prices coincided with heightened demand for downstream food preservatives, particularly in the FMCG sector, amid rising global food prices. Additionally, high feedstock ethylene prices affected the production costs of Propionic Acid. Although on the energy front, energy prices have remained stable, defying peak season expectations, the overall cost support from high feedstock and upstream crude oil prices has kept production costs high. Meanwhile, the weak coal market was characterized by minimal purchases from power plants due to ample stockpiles and trading hindrances from bid-ask price spreads.

Global demand for Propionic Acid has been bullish from past few months, as extreme temperatures have amplified its consumption as a food preservative. The upcoming Zhongyuan Festival in August, also known as the Ghost Festival, has further surged the demand for Propionic Acid in the Chinese domestic market. Further, the imposition of anti-dumping duties on July 21, 2024, by the Ministry of Commerce China on USA companies has significantly increased the consumption of domestically produced Propionic Acid in China, as duties of around 43.5% were levied by Chinese Authorities. Conversely, the sale of U.S.-manufactured Propionic Acid in the Chinese market has decreased due to these new trade barriers, leading to an oversupply and declining prices in the U.S. domestic market. This escalation in food prices has stimulated greater engagement in food preservation processes, thereby elevating the demand for Propionic Acid within the food sector. FMCG industries continue to show positive demand, driven by rising domestic consumption and increased inquiries from other markets during the summer season.