Global Propylene Glycol Market Braces for Further Price Erosion Amid Subdued Demand
Global Propylene Glycol Market Braces for Further Price Erosion Amid Subdued Demand

Global Propylene Glycol Market Braces for Further Price Erosion Amid Subdued Demand

  • 16-May-2024 3:04 PM
  • Journalist: Rene Swann

Propylene Glycol prices are expected to continue their downward trend globally in May, mirroring the previous month's trajectory. Several factors contribute to this trend, including persistently subdued demand from end-user sectors, a softening in the raw material market, and ample supply within the industry. Propylene Glycol is derived from propylene oxide, which itself is produced from propylene, a petrochemical. Recent data indicates that both the propylene and propylene oxide markets have exhibited weakness, exerting downward pressure on Propylene Glycol prices.

Downstream, procurement activities have been cautious amid cost pressures, with limited enthusiasm among market participants to enter the fray. This cautious approach has resulted in poor sales for propylene enterprises, prompting them to adjust prices downwards in a bid to stimulate demand. Furthermore, the propylene oxide market has remained stable but weak at the outset of the month. Delayed procurement follow-up from downstream customers has led to a decline in propylene oxide prices, further supporting the downward trajectory of Propylene Glycol prices.

Propylene Glycol has applications in various industries like antifreeze, food & beverages, and pharmaceuticals. However, demand for Propylene Glycol in some of these sectors, particularly those related to antifreeze, tends to be lower during warmer seasons like spring and summer. This seasonal decrease in demand could lead to a price decline for Propylene Glycol globally.

In April, China, the world's second-largest economy, experienced a notable deceleration in both manufacturing and service activities, signaling a sluggish commencement to the second quarter. According to official reports from the National Bureau of Statistics (NBS), the manufacturing Purchasing Managers' Index (PMI) dipped to 50.4 from March's 50.8, primarily reflecting weakened domestic demand. This slowdown underscores a waning momentum in the manufacturing sector, which in turn influences the downward trajectory of Propylene Glycol prices. Additionally, the onset of Labor Day holidays in China around the start of May resulted in factory closures and reduced workforce activity. This hiatus in production may translate to a temporary decrease in demand for Propylene Glycol from downstream industries, exacerbating a supply-demand imbalance and potentially leading to price reduction in Propylene Glycol prices.

Additionally, the reluctance of central banks in developed economies such as North America and Europe to lower interest rates has further weighed on consumer sentiments, exerting additional downward pressure on Propylene Glycol prices.

Moreover, DOW's recent announcement of the introduction of two new sustainable Propylene Glycol solutions in North America, utilizing bio-circular and circular feedstock, has added a new dimension to the market. These innovations allow companies to offer high-performance products with externally certified sustainability benefits, expanding their appeal across a wide range of applications through a mass balance method. This introduction of sustainable alternatives by DOW could potentially foster increased competition within the market. Other companies may feel compelled to innovate or adjust their offerings to remain competitive, potentially leading to pricing adjustments aimed at attracting customers.

As per the ChemAnalyst analysis, the prices of Propylene Glycol likely to decline in the upcoming months due to consistent weak offtakes from downstream sectors. Moreover, the market of raw material could also fluctuate steadily with a narrow range, keeping the overall market sentiments on lower side.

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