Global Propylene Glycol Prices Demonstrate a Downward Trend Amidst Weak Demand

Propylene Glycol prices continued to fall across the globe in June due to weaker downstream demand from end-user sectors. Also, the decline in Feedstock Propylene Oxide prices in June further supported the downward price trend.

Propylene Glycol is a viscous substance commonly used as an additive to aid food processing and improve texture, taste, appearance, and shelf life. It is also used as a drug stabilizer and solvent in the pharmaceutical industry. Recently, demand from these end-users, the food, and pharmaceutical industries, has declined, putting downward pressure on prices.

At the industrial level, Propylene Oxide is mainly used to produce Propylene Glycol. The Propylene Oxide market also declined in June because of increased supply, weakened factory shipments, and lower demand from downstream industries. This eventually led to decreased price of Propylene Glycol. There are sufficient stocks among market participants in warehouses to fulfill consumer demand. Manufacturers and suppliers decreased the prices of Propylene Glycol and focused on destocking to clear their existing inventories in order to maintain profit margins.

According to the National Bureau of Statistics (NBS), China's manufacturing PMI (Purchasing Managers' Index) was 49 in June 2023, indicating lower manufacturing and purchasing activity, and new orders, indicating lower market demand. Moreover, the Chinese yuan depreciated against the US dollar in June, suggesting that declining consumer confidence is slowing China's post-pandemic recovery. Meanwhile, the aftermath of Russia's invasion of Ukraine and the Covid-19 pandemic continued to affect the export of Propylene Glycol from China to other countries leading to increased supply in the domestic market that kept the prices lower.

A similar downward trend in Propylene Glycol prices is being seen in the US market as supply is plentiful, accompanied by weak demand in the US market. The arrival of new shipments from China and falling commodity prices created an oversupply in the US domestic market, supporting the downtrend price trajectory.

In addition, weak purchasing dynamics and overstocks in European markets, especially in Germany, led to lower Propylene Glycol prices. Germany's inflation rate rose to 6.4% in June from 6.1% the previous month, driven by higher energy and food prices, according to Destatis. This has increased the cost of living and reduced consumer purchasing activity, leading to lower prices for Propylene Glycol.

As per the ChemAnalyst analysis, Global Propylene Glycol prices continued to fall over the next few months due to continued weakness in end-user demand and ample supply in the market. Market participants may concentrate on clearing inventories at lower quotations.