According to SunSirs, the propylene glycol market in the second half of July saw prices initially rise before falling back. As of July 29, the average ex-factory price of propylene glycol in the Shandong region stood at 9,233 RMB/ton, a decline of 2.46% compared to the middle of the month.
Key driving factors
Cost side: The price of the raw material propylene oxide was the key variable driving market trends during the second half of July. Propylene glycol prices are highly correlated with upstream propylene oxide and crude oil costs. Geopolitical tensions in the Middle East caused crude oil price fluctuations, which in turn drove volatility in propylene costs and led to frequent price swings in propylene oxide; consequently, propylene glycol prices fluctuated in tandem due to this significant cost pass-through effect.
On the supply side, domestic propylene glycol capacity remains generally ample; however, concentrated maintenance at plants in certain regions during July lowered industry operating rates, leading to localized, short-term supply tightness that provided temporary price support. Meanwhile, the phase-out of outdated capacity and stricter environmental regulations have somewhat constrained the overall growth rate of supply. Regarding imports and exports, import volumes remain consistently low, limiting the impact of external market fluctuations.
Demand side: Traditional downstream sectors for propylene glycol—including unsaturated polyester resins, alkyd resins, and polyethers—are currently in the traditional summer off-season. Orders for construction materials and composites remain weak, keeping downstream plant operating rates low. Downstream enterprises are generally adhering to a "buy-as-needed" strategy; with prices high, there is little appetite for stockpiling, which continues to limit upward price momentum. While propylene glycol export volumes surged by 148% year-on-year in June—with overseas orders absorbing domestic supply and alleviating pressure from weak domestic demand—demand for cosmetic and food-grade products remains stable but accounts for a limited share of total consumption, making it insufficient to drive the overall market.
Market Outlook:
Propylene oxide costs remain supported at the low end, while geopolitical developments could still disrupt crude oil and feedstock prices. Export orders remain resilient, continuing to divert domestic supply; however, the traditional downstream off-season persists, and there is limited acceptance of high-priced raw materials. Supply is increasing as maintenance-halted units resume production, leading to a slow accumulation of commercial inventories. Following the realization of earlier cost-driven gains, there is insufficient momentum for further upward movement. In the short term, propylene glycol prices are likely to continue fluctuating weakly within a range; upside potential is limited, and there is a risk of a further slight pullback.
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