Market Overview:

Recently, the propylene glycol market in Shandong province has entered a new phase characterized by a struggle between weakening support and increasing weak demand. Market prices have softened, and market sentiment has shifted from cautious observation to a bearish outlook. Manufacturers have proactively adjusted prices, leading to a downward shift in market prices.

According to data monitored by the SunSirs commodity price analysis system, as of December 18th, the average price of propylene glycol in Shandong province is 6,050 RMB/ton, a decrease of 1.36% compared to the beginning of December. The price is at a historical low, and trading activity is sluggish, with room for negotiation on actual transactions.

Supply side: Shifting from "structurally tight" to "expected to be abundant."

The market supply landscape is undergoing a dynamic transformation. At the end of November, several production facilities, including those of Shandong Lihua Yiwei and Tongling Jintai, resumed operations, leading to a significant increase in supply. This, coupled with the expected launch of new production capacity from companies such as Fujian Baihong Chemical, continues to weigh on market sentiment, causing traders to become less willing to hold out for higher prices.

Demand side: Weak domestic demand and insufficient support

Downstream industries are facing the dual pressures of capital recovery and shrinking orders at the end of the year, which prevents them from providing upward momentum to the propylene glycol market.

Unsaturated polyester resin (UPR): As the largest consumer of propylene glycol (accounting for over 50%), the UPR industry is experiencing a slump. In the first half of December, the capacity utilization rate of the unsaturated polyester resin industry was only 35%, remaining at a low level. Insufficient orders from end-use sectors such as construction and composite materials have led resin factories to maintain only minimal, essential purchases of propylene glycol, failing to generate effective demand.

Polyether polyols: Another major downstream sector also performs poorly, with a capacity utilization rate of approximately 58%. New orders are weak, and while consumption of propylene glycol remains stable, there is a lack of growth drivers.

Raw material cost side: The support from propylene oxide (PO) is loosening

The price trend of propylene oxide (PO), the raw material, is a key factor affecting the cost of propylene glycol. In the first half of December, the PO market ended its previously sustained strong performance. Although the temporary shutdown of facilities such as those at Qixiang in Shandong province initially provided some positive sentiment, the weak demand from its downstream polyether market hindered the price increase of PO, leading to a stalemate or even a slight decline. This resulted in a substantial weakening of the cost support for propylene glycol production, providing room for manufacturers to lower their prices. The cost-driven logic shifted from "strong support" to "neutral to bearish."

Market Outlook: Weak consolidation, sideways trading at the bottom

In the latter half of December, market control will be entirely in the hands of the demand side. Cost pressures and fluctuations will make it difficult to provide any effective boost. The expectation of ample supply will exacerbate bearish sentiment in the market. In the absence of positive catalysts, the market is highly likely to remain at low levels, and is expected to gradually seek a new price bottom through a combination of gradual declines and fluctuations. A market stabilization and rebound may not occur until January 2026, depending on the pace of downstream inventory building before the Spring Festival and the operational status of supply-side facilities.

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