Firm Demand Driving DPM Price Trends in China

Shanghai (China): After mid-May 2024, the market for Dipropylene Glycol Monomethyl Ether (DPM) in China witnessed a notable increase in the prices driven by robust demand both domestically and globally. Industries such as paint, coating, adhesive, and others continued to show strong interest, reflecting sustained inquiries and procurement activities. The ongoing Hamas-Israel conflict played a role in this upward trend by elevating crude oil prices due to geopolitical tensions and disruptions in global crude oil supplies, thereby pushing up container shipping rates as well.

In May 2024, China's manufacturing sector demonstrated significant improvement, characterized by accelerated production growth and a notable uptick in new orders. This led to a heightened accumulation of backlog and increased purchasing activities, as companies scrambled to secure essential inputs for their current and future production needs. The robust demand, both domestically and internationally, particularly in the consumer goods segment, fueled substantial output growth. China's exports surged by 7.6% year-on-year to USD 302.35 billion in May, further bolstering stable DPM prices. However, challenges persisted, including sluggish propylene oxide trading and disruptions caused by regional flooding and power outages. These factors, combined with sustained high crude oil and coal prices due to seasonal demand and port congestion in crucial Asian ports, exacerbated supply chain complexities and contributed to upward pressures on DPM prices.

The demand for Dipropylene Glycol Monomethyl Ether (DPM) in China witnessed a notable surge, driven predominantly by a resilient rebound in the housing sector. The steady increase in new home prices, supported by governmental interventions aimed at stabilizing the property market through relaxed mortgage regulations and increased financial injections, spurred construction activities. This uptick, in turn, stimulated moderate growth in downstream industries such as paint and coating, where DPM plays a crucial role as a solvent. Despite initial challenges posed by the USA's imposition of a 100% tariff on Chinese EVs, which initially dampened prospects for downstream sectors, the domestic market's recovery has mitigated these impacts. Positive market sentiments and increased procurement activities have further bolstered the demand for DPM, resulting in significant price increases.

Looking ahead, the price outlook for DPM is expected to soften due to increasing inventory levels, which will exert downward pressure on prices. Forecasts indicate that demand of DPM from downstream sectors may not exhibit robust growth. Moreover, the supply of DPM is anticipated to outpace demand, asserting dominance in the market dynamics. These factors collectively suggest a decline in prices in the coming months.