Domestic industrial-grade propylene glycol (PG) followed a trend of easing first and then rebounding this week, driven upward by cost factors. The largest supply-side variable centered on the restart progress of two plants in Shandong. Last week, the market generally expected that once the major plant in the main market resumed production, it would gradually raise operating rates and release notable incremental supply, leading some participants to hold bearish sentiment. However, during this week, the restarted plants remained in the commissioning phase, with load ramp-up progressing slower than industry expectations, and the anticipated incremental supply was not delivered on time. This upended earlier expectations of ample supply and quickly intensified market caution. In addition, another new plant in the Shandong market came on stream, reinforcing expectations of increased medium-term supply and becoming a key factor capping bullish sentiment.
Over the past weekend, several raw material units experienced unexpected temporary shutdowns. After these shutdowns, some enterprises stepped up external procurement to replenish inventories, quickly driving the raw material market higher. Upstream raw material prices were raised substantially, and cost pressure rapidly transmitted downstream to the PG production segment. Producers' offering prices followed the raw material surge but soon turned stagnant at higher levels.
By midweek, the raw material rally slowed and entered a standoff, with market prices easing slightly. However, prices for the chain's upstream feedstocks—propylene and propylene oxide—remained high overall, with no deep correction. Cost-side support at the bottom stayed solid, and PG production costs remained at relatively elevated levels. Producers continued to show a strong inclination to hold prices firm.
Despite continued price increases in the PG market this week, the willingness on the demand side to chase higher prices was insufficient. The currently elevated prices significantly suppressed downstream purchasing. Both domestic downstream demand and export markets showed clear resistance to the steadily rising spot prices and generally avoided buying at high levels. The market widely expects new supply to be released later, prompting downstream buyers and inventory holders to wait for lower price points before replenishing, which further dampened current purchasing enthusiasm. Overall, the market's inclination to build inventory remained low. On the export front, overseas markets simultaneously received the signal of domestic price increases. After domestic quotations moved up, overseas buyers turned more cautious, with limited willingness to place additional orders. Moreover, as overseas plants gradually restart and resume operations, export volumes have been declining month by month.
Table 1: Propylene Glycol Import and Export Statistics (10,000 tonnes)
| Jan–Jul 2026 cumulative | Jan–Jul 2025 cumulative | Cumulative YoY | Jul 2026 | Jun 2026 | Jul 2025 | MoM % | YoY % | |
|---|---|---|---|---|---|---|---|---|
| Imports | 3.08 | 3.53 | -12.77% | 0.19 | 0.29 | 0.51 | -33.23% | -62.04% |
| Exports | 27.65 | 17.07 | 62.02% | 3.39 | 4.91 | 2.65 | -30.98% | 27.63% |
Looking ahead, the market will mainly revolve around two core variables: the pace of output ramp-up at the plants and cost-side developments.
If the plants successfully ramp up output next week, supply pressure will be released. Against the backdrop of still-weak downstream demand, spot prices will face downward pressure. Even with some cost support, market prices may trend weaker, with the spot price center gradually moving lower and the transaction focus shifting toward the lower end. If raw material prices continue to hold firm and rise while plants ramp up as scheduled, the market will form a "cost support + supply increase" offsetting pattern, and PG market prices may fluctuate within a narrow range. Close attention should be paid to the operating status of the two Shandong plants and raw material price movements.
Comments
0