Sluggish Demand and Oversupply Pressure Propel Propylene Carbonate Prices Downward in the German Market

Hamburg, Germany: The prices of German Propylene Carbonate have shown a downward trend throughout December 2023 as consumer demand remained subdued in the region due to various factors. The demand for Propylene Carbonate from downstream industries has continued to stagnate due to declining production costs, high destocking, and poor domestic consumption.

Furthermore, the demand for Propylene Carbonate from the EV sector was sluggish in this period amid oversupply and low demand as manufacturing firms operated at a slower pace due to lagging demand. Additionally, purchases were mainly on a demand basis as sufficient inventories of Propylene Carbonate were present in the domestic market. In the local Propylene Carbonate markets, an oversupply issue has emerged, leading to elevated stock levels attributed to weak demand. Despite minimal market transactions domestically, vendors demonstrated improved performance despite subdued regional trading activities.

The industry has faced a slower-than-expected pace, mainly due to off-season lethargy in the domestic market, contributing to bearish sentiments among Propylene Carbonate manufacturers. Furthermore, the ifo Business Climate Index experienced a decline from 87.2 points in November 2023 to 86.4 points in December 2023. Additionally, persistent sluggishness in downstream demand, coupled with unfavorable production costs, has put sales pressure on sellers, compelling them to reduce prices to clear accumulating inventories.

Additionally, production cost of Propylene Carbonate have been sluggish amid weak cost support from upstream raw materials as the prices of propylene oxide have been decreasing week-on-week. European Propylene Carbonate storage facilities are still considerably stocked, guaranteeing a seamless transition through the winter months with no disruptions. Investors are expressing pessimism towards European natural gas, as ample inventories and reduced winter demand contribute to this sentiment.

According to the ChemAnalyst database, the prices of Propylene Carbonate are anticipated to demonstrate a further downward trend in the first quarter of 2024. The global deflation of chemical prices and margins is being driven by the slower-than-anticipated recovery in chemical demand in China following the lockdown. This is occurring despite the ongoing construction of substantial new capacity in the country.

After the holiday season in Europe, businesses anticipate a temporary drop in the demand for petrochemicals like Propylene Carbonate. This could lead to proactive destocking efforts to avoid the buildup of excess inventory. In specific industries, production schedules are adjusted strategically to align with decreased activity or shutdowns during the holiday season. Consequently, this leads to changes in inventory levels, particularly in petrochemical sectors such as Propylene Carbonate.