In the latter half of January 2026, the propylene glycol market in Shandong exhibited overall weakness, following a V-shaped trajectory characterized by a sharp initial decline followed by a weak rebound. The core drivers of the market downturn were the weakening raw material costs, persistently sluggish demand, and sustained supply pressure. After losing key support, prices accelerated their decline, hitting a historic low. The continuous price drop prompted a slight increase in shipments from some enterprises. Coupled with marginal stabilization in costs, the market attempted a small price increase after destocking. However, the absence of demand failed to reverse the overall weak market sentiment. According to the commodity market analysis system of 100ppi.com, as of January 29, the average production price of propylene glycol in Shandong was 5,933 yuan/ton, representing a decline of 1.39% during the period.
Analysis of Core Driving Factors
Supply Side: Loose Supply Becomes the Norm, Pressure Persists
The operating rate of propylene glycol plants in Shandong fluctuated within a narrow range recently, with the average rate maintained around 73%. Overall supply remained ample, and market availability was abundant. Approaching the Spring Festival holiday, some plants planned maintenance or production cuts in advance, which may lead to a slight contraction in supply. However, this is only expected to alleviate short-term pressure and cannot reverse the overall oversupply situation. Continuous attention is required on the actual operational status of leading producers' facilities.
Demand Side: Lack of Rigid Demand, Downstream Support Universally Insufficient
Propylene glycol downstream demand is concentrated in unsaturated polyester resin (UPR), coatings, and polyether sectors. Currently, the market is in the traditional seasonal off-season. The operating rate in the UPR industry is below 40%, with companies focusing on inventory digestion and showing weak willingness for bulk procurement. Other downstream sectors like coatings and polyether have not shown significant recovery, with rigid demand limited to sporadic restocking. Although there was a slight increase in export volumes, Southeast Asian buyers exhibited strong price pressure, mostly locking in low-priced supplies. This failed to drive up domestic prices overall, rendering the demand side completely ineffective in stimulating the market.
Cost Side: Core Raw Material Weakens, Cost Support Collapses Completely
Propylene oxide (PO) is the core raw material for propylene glycol, accounting for 70%-85% of its cost. Its price fluctuations directly determine the cost floor for propylene glycol. After a brief surge in the first half of January, PO prices quickly retreated. As of January 29, the 100ppi.com benchmark price for PO fell to 8,200 yuan/ton, a decline of 5.02% during the period, significantly weakening cost support. Furthermore, leading propylene glycol producers mostly have integrated PO facilities, with raw material self-sufficiency exceeding 80%. The lack of cost advantage from external purchases further intensified downward price pressure.
Outlook for the Later Market
As the Spring Festival holiday approaches, enterprises are gradually suspending operations for the holiday. The stockpiling cycle is largely concluded, with only sporadic rigid demand restocking from end-users and no incremental demand support. Market participants primarily focus on destocking and cash collection, leading to a strong wait-and-see sentiment. It is expected that low-level fluctuations will be the main theme for propylene glycol prices before the holiday, with attention on supply conditions from market facilities.
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