NPG Prices Hold Steady in USA and Europe, Decline in China Amid Weak Demand

The Neopentyl Glycol (NPG) market experienced a period of stability in the North American and European regions since the last two weeks of November. Despite a relatively moderate performance in the US downstream paints and coatings industry, this steady state persisted. The consistent condition was upheld as the producers continued to rely on existing inventories with no new bids or inquiries from the downstream paints and coatings industry. Further, the cost pressure of essential upstream material Methanol remained somewhat restrained in the USA and German markets, supporting the prevailing price trend of NPG. However, the prices declined significantly in the Chinese market as the procurement orders remained subdued from the international market, particularly the Indian market, during this timeframe.

In the German market, the price of NPG remained stable in the latter part of November 2023. The lackluster performance of the end-user construction sector in Germany and other European countries importing this product negatively impacted NPG demand. High-interest rates within the country have discouraged potential buyers in the end-user paints and coatings industry from participating in the market. Additionally, insights from various market participants indicate a decline in the end-user construction sector within the country, further contributing to the downward pressure on NPG prices.

Similarly, in the US market, suppliers are proceeding cautiously with any potential further price reductions due to a combination of relatively modest demand and a limited number of firm bids and offers among suppliers. Notably, the upstream material cost pressure from Methanol has remained subdued, contributing to the current price stability. Despite a robust supply situation, improved supplier performance and ongoing soft demand conditions have led companies to reduce their input purchases in November. Regarding trade flow, the export of NPG from the USA to Mexico and other South American countries has been lackluster, reflecting limited demand in the domestic market. These factors collectively influence the overall price trend, with market participants primarily concerned about narrowing profit margins and declining sales, prompting them to maintain a stable pricing strategy for NPG.

However, the Chinese NPG market witnessed a decrease in prices. The stability of essential feedstock prices during the same period limited the cost pressure on NPG prices. International demand for NPG, particularly from major importing country India, remained relatively low this week, as most orders were contractual and had been fulfilled by the end of October 2023. Further, inadequate climatic conditions in the country weakened construction activities in the region, dampening the purchasing enthusiasm of NPG consumers. Consequently, the NPG market remained bearish for the week, with ample material within the country. These factors contributed to a narrowed gap between demand and supply, supporting the declining price trend.