Optimism Prevails in the Global NPG Market, Demand Boost Supports the Trend

During the first week of February, the Neo pentyl Glycol (NPG) market witnessed bullish sentiments in the western market. This surge in prices can be primarily attributed to the increase in feedstock prices, strong demand, and elevated shipping rates. However, prices in the Asian market remained stable, indicating a balanced demand and supply gap.

The North American NPG market exhibited optimistic sentiments for the week ending on February 2nd.  The NPG prices increased by a margin of 1.3% primarily propelled by the escalation in prices of crucial upstream material particularly Crude Oil and Benzene, resulting in higher energy prices and production costs, consequently exerting upward pressure on NPG prices. Moreover, spot prices in the continent demonstrated an upward trajectory, influenced by shortages of materials and disruptions in deliveries due to labor strikes. During this period, the downstream paints and coatings industry sustained a moderate level of demand, indicating a stable but not notably robust market. Additionally, persistent trade uncertainties stemming from ongoing rebel attacks in the Red Sea further contributed to the escalation of NPG prices. Disruptions in and around the Bab el-Mandeb, caused by attacks on commercial vessels along the shipping route connecting the Indian Ocean with the Mediterranean Sea via the Red Sea and the Suez Canal, have constrained traffic since late 2023. Even without rerouting vessels, the increased insurance costs for passing through the Strait have impacted profit margins, prompting traders to raise the prices of various commodities passing through the Red Sea, including NPG.

On the contrary, the Chinese NPG market experienced a period of stagnation during the week ending on February 2nd, following a significant increase in the preceding weeks. Demand for NPG in the country remained stable, particularly within the paints and coatings industry, which displayed moderate performance during this period. Simultaneously, the supply of NPG was also moderate. Overall, the trend of upstream raw materials witnessed an increase, providing satisfactory support to the market from a cost perspective. Terminal enterprises reported relatively low production levels, although some purchasing activities displayed signs of increase. The market demonstrated increased resilience ahead of the holiday period, leading to expectations of limited short-term growth in the NPG market. In January, according to the National Bureau of Statistics (NBS), China's manufacturing industry Purchasing Managers' Index (PMI) was recorded at 49.2 percent, indicating a slight increase of 0.2 percentage points from the previous month. The overall climate of the manufacturing industry rebounded, with the production index at 51.3 percent, reflecting a 1.1 percentage point increase from the previous month, indicating an improvement in manufacturing production. The new order index increased to 49.0 percent, up by 0.3 percentage points, indicating an improvement in market demand for manufacturing.

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.