In the first half of September, the domestic propylene glycol market showed a trend of “first suppression, then rebound, and rapid rise”, with a significant shift in price focus compared to the end of August. However, the dominant logic of the market is not demand recovery, but strong transmission from the raw material side. As of September 14th, the average production price of propylene glycol in Shandong Province was 10766 yuan/ton, an increase of 14.13% from the beginning of the month.
Core driving factors
Cost side: High level support from epoxy propane, but weakened marginal support
The cost of propylene glycol is highly linked to epoxy propane (PO). In early September, the strong operation of epichlorohydrin provided cost support for propylene glycol and was an important driving force behind this round of price increases; However, the market expects epoxy propane to strengthen in the first half of the year and gradually weaken in the second half, and the cost support will be marginally loosened, making it difficult for the cost side to continue driving propylene glycol to further increase significantly. The fluctuation of propylene raw materials is limited, the bottom line of costs is still in place, and the short-term space for deep decline is limited.
Supply side: Short term maintenance disturbance, suppressed expected increase in production resumption
The early maintenance of the equipment resulted in a tight supply of spot goods, causing strong price support sentiment among holders and driving up prices; But in the latter half of the year, some devices were restarted one after another, and market supply expectations increased, suppressing some upward space.
On the demand side: Jinjiu’s expected fulfillment is insufficient, with a focus on urgent needs and conservative stocking
Although it has entered the traditional peak season of September, downstream order recovery is weak, and the increase in production is limited. The resin and coating industries maintain on-demand demand, while the antifreeze industry is still in the off-season. The overall demand increment is limited, which restricts the comprehensive and significant rise of the market.
Market forecast:
Short term: With the gradual resumption of maintenance equipment in the early stage, the supply of goods is gradually released, and the expectation of loose supply is realized. On the premise that there is no obvious outbreak of demand, the price is under pressure and falls, oscillating downwards. If epoxy propane unexpectedly continues to strengthen and production is delayed, the high-level oscillation time will be prolonged, but it will be difficult to continue to rise significantly.
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