German Propylene Carbonate Market Faces Turmoil in October 2023 Amidst Sluggish Demand

Hamburg, Germany: The Propylene Carbonate market in Europe has demonstrated a downward trend throughout October 2023 as consumer demand remained timid in the region due to manifold factors. The demand for Propylene Carbonate from the downstream industries has continued to stagnate due to rising production costs, poor inventory management, a tight labor market, and poor domestic consumption.

However, the demand for Propylene Carbonate from the EV sector was sightly stable in this period amid balanced supply and demand fundamentals as the manufacturing firms were operating at a slower pace amid lagging demand. Additionally, the procurement was mainly on a need basis as sufficient inventories of Propylene Carbonate were present in the domestic market.

The German chemicals sector, the country's third-largest industry, employs over 500,000 people and is confronting a sluggish global economy, high inflation, and increasing interest rates, all of which weigh on demand. Additionally, the lack of investment in the region due to higher interest rates has also played a significant role in the Propylene Carbonate manufacturing sector.

In addition to this, manufacturing costs of Propylene Carbonate have been declining amid low-cost support from the upstream Propylene oxide. The prices of natural gas and crude oil have fluctuated throughout the month amid unrest in the Middle East. The crude oil prices increased by more than 3 dollars per barrel in the first week of October after plunging by more than 10% in the previous secession due to concerns that the escalated conflict between Israeli troops and the Palestinian Islamist organization Hamas may affect Middle Eastern output.

According to the ChemAnalyst database, the prices of Propylene Carbonate are anticipated to demonstrate a further downward trend in the fourth quarter of this year. The market giants operating in Europe anticipate that seasonally lower demand across month sectors is presumed in the further quarter. Higher feedstock costs of Propylene Carbonate, new industry capacity, and slowing Chinese demand growth continue to put pressure on the profit margins.

Moreover, as per the market participants, the demand for Propylene Carbonate is projected to remain low in the next months also due to winter, and the majority of the gas supply is expected to be redirected to heating oil, resulting in another increase in energy costs. Germany is facing its second winter without the Russian gas it previously relied on. However, the government is significantly more prepared than a year ago: stockpiles are nearly full, alternative import capacity has been boosted, and emergency measures are in place.