Neopentyl Glycol Market Surges in USA While Playing in Contrast with Asia

Neopentyl Glycol (NPG) market experienced divergent trend during the second half February 2024 in western and Asia-pacific market. The prices of NPG increased in the western market influenced by increasing price of essential raw material Crude Oil and Benzene along with firm demand from prominent downstream paints and coatings. However, the NPG market experienced a soft-to stable trend in Asian market amidst steady demand from paints and coatings after Spring holiday season.

During the latter part of February 2024, the North American NPG market experienced optimistic sentiments. This upsurge in prices can be chiefly attributed to a robust demand for NPG within the paints and coatings sector. The notable performance of the automotive and construction sectors during this period remained pivotal in driving the demand for NPG in paints and coatings. Multiple market sources have indicated a significant increase in activity within the USA construction sector over recent weeks, with expectations for continued growth, thereby bolstering the ongoing price trend. Enhancements in the US construction sector have been characterized by a rise in renovation projects within the hotel industry and a shortage of existing homes across the country, prompting an increase in housebuilding activities.

The stabilization of mortgage rates, as reported by Freddie Mac, has fostered a positive outlook among potential homebuyers, further bolstering the US NPG market. Additionally, strong performance was observed in other end-user automotive sectors during this period, with new vehicle sales exceeding 1.2 million in February, reflecting a 6.3% year-over-year increase and a 12.4% month-over-month increase. Although US auto sales experienced a decline of more than 21% from December to January, they rebounded in February owing to favourable weather conditions, robust inventory levels, and increased incentives.

The escalating costs of raw materials were underscored, placing pressure on OQ Chemicals' margins and necessitating a price hike for NPG to sustain profitability. However, this decision by OQ Chemicals is expected to have ripple effects throughout the industry. Companies reliant on NPG for their products, such as plasticizers, coatings, and lubricants, will need to adapt their pricing strategies to accommodate the heightened costs. This could potentially result in increased prices for downstream products and services, impacting consumers across various sectors.

In contrast, the NPG market in the Asia-Pacific region saw a soft-to-stable trend. Expectations from the end-user automotive sector were diminished. According to data from the China Association of Automobile Manufacturers (CAAM), vehicle sales, including exports, reached 2.44 million units in January 2024, marking a 22.7% decrease from December, with further declines expected. Additionally, the occurrence of Chinese New Year during this period led to fewer business days, exacerbating the sales downturn. As a result, with ongoing declines in downstream electric vehicle (EV) sales in China, demand for NPG, a critical component in various automotive applications, remained subdued. Nonetheless, the region's supply chains demonstrated significant resilience, effectively navigating potential challenges and ensuring an uninterrupted flow of goods and services, thereby fostering a stable and predictable market environment.

According to ChemAnalyst, it is anticipated that NPG prices may experience additional fluctuations in the global market due to several factors, including rising Crude oil prices, ongoing trade uncertainties, and a resurgence in demand.