Price trend

According to SunSirs, the domestic propylene glycol market experienced volatility and a downward trend in early August. While there were initial expectations that prices would hold firm, the market center of gravity gradually shifted lower as some producers reduced their ex-factory quotes; trading was driven primarily by actual order negotiations, and the spread between high and low price points widened. As of August 13, the average production price of propylene glycol in the Shandong region stood at 9,200 RMB/ton, a decline of 3.50% from the beginning of the month.

Key driving factors

Supply side: Plants undergoing earlier maintenance have successively resumed production, leading to a month-on-month rise in industry operating rates and increased market supply. Operations at dimethyl carbonate co-production units remain stable with a steady outflow of the by-product propylene glycol, adding to market supply pressure; however, fluctuations at a few facilities have provided a slight buffer against this trend, and with overall import volumes remaining low, the impact from external sources is limited.

On the cost side, the price of the feedstock propylene oxide is fluctuating with a downward bias, while propylene prices track crude oil fluctuations; consequently, cost support for propylene glycol has weakened somewhat. While there is no strong upward momentum driven by costs, the feedstock price floor provides some underlying support, limiting the scope for a sharp decline.

On the demand side, the market is in the traditional summer off-season; operating rates for downstream unsaturated polyester resin and alkyd resin sectors remain low, and orders for end-use construction materials and composites are sluggish. Downstream purchasing is largely driven by immediate needs, with little inclination to build up inventory. While demand for daily chemical and food-grade products remains stable, these segments account for a limited share of the total market and are insufficient to drive overall volume. Export orders remain resilient, diverting some domestic supply, but not enough to alter the off-season market trend.

Market Outlook

In the short term, propylene glycol prices are expected to continue fluctuating weakly within a range. On the supply side, the resumption of production has increased availability, creating pressure for inventory accumulation; on the demand side, the market remains in the off-season, with little prospect of significant improvement downstream; regarding costs, propylene oxide provides a floor of support, limiting the scope for a sharp price decline. Key factors to monitor include the price trend of the feedstock propylene oxide, changes in plant maintenance schedules, and the pace of downstream restocking.

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