NPG Market Surges in Asia Amidst Material Shortage, Exhibits Stagnancy in North America

During June 2024, the global Neopentyl Glycol (NPG) market displayed distinct trends. In North America, the market experienced price stagnation, primarily due to the moderate demand from the downstream paints and coatings industry. On the other hand, the Chinese NPG market saw substantial price volatility, ultimately leading to a significant price increase. This price surge occurred despite a noticeable decrease in demand from the downstream sector.

In the North American market, NPG prices exhibited stability during the initial two weeks of June 2024 but saw a slight increase in the latter half of the month. This price uptick was primarily driven by partially constrained supplies of NPG within the United States, compounded by expensive imports from overseas. Heightened freight charges and delayed shipments, exacerbated by persistent port congestion, have significantly impacted the market dynamics. Average container prices have surged by 26% from October 2023 to June 2024, reflecting the increased costs associated with international trade. Additionally, leasing rates for containers on key routes, such as from Asia to the US, have doubled since November, further elevating import costs.

Simultaneously, demand from essential downstream sectors, notably paints and coatings, remained moderate during this period. Insights gathered from industry participants suggest that the resurgence in new orders spurred US service providers to markedly increase their business activities in the latter half of the second quarter of 2024. This heightened business activity likely contributed to the upward pressure on NPG prices as the market responded to heightened demand amid ongoing supply challenges.

In contrast, the Chinese market experienced frequent fluctuations in the price of NPG, culminating in a new high of USD 1600 per metric ton during the third week of June 2024. This price surge was primarily driven by the elevated costs of essential raw materials, such as formaldehyde and crude oil. The increase in raw material prices prompted higher production rates, which in turn exerted upward pressure on NPG prices. Additionally, the market faced significant challenges due to factory equipment malfunctions and partial sales stoppages. These disruptions led to a shortage of goods and constrained supply, further driving up prices. Information from various market participants indicates that inflation predominantly impacted key production areas in the north, likely increasing production costs and exacerbating supply constraints.

Although demand for NPG from the downstream paints and coatings sector remained somewhat restricted, the elevated production costs mitigated its effect on NPG prices. The combined impact of increased raw material prices, production disruptions, and inflation in key production areas contributed to the overall upward trend in NPG prices in the Chinese market.