Lead-in: The sharp fluctuations in international oil prices this week were the core trigger for the reversal in the propylene glycol market. Driven by a significant rise in international oil prices due to the Middle East situation, feedstock propylene and propylene oxide prices surged broadly, providing strong support for propylene glycol market prices.
In the feedstock market, propylene oxide (PO) prices rose sharply after a period of consolidation. During the period, the market was primarily bolstered by the positive impact of rising propylene prices, further compounded by supply-side factors such as reduced operating rates at several plants and a shutdown at Lianhong, leading to an overall tightening of supply. Operating PO plants had essentially no inventory pressure and followed propylene in raising offer prices broadly. The price transmission effect along the industrial chain was significant, with propylene glycol production plants raising their offer prices firmly.
On the supply side, plants such as Zhejiang Tiesheng Dafeng and Hunan Zhongchuang Chemical successively restarted and ramped up output, while other units maintained their previous operating status. Overall supply increased compared to the previous week. From the end of last week to the beginning of this week, suppliers' offer prices rose moderately. Operating plants adopted a strategy of limited sales and reluctance to sell, and market participants, observing the potential for further short-term increases, made some follow-up purchases, resulting in a good trading atmosphere. However, as feedstock PO prices surged, propylene glycol plants raised their offer prices to a cyclical high. Downstream buyers showed weak willingness to chase high prices; while inquiries in the market were numerous, actual high-priced transactions were few.
On the export front, export volumes increased month-on-month from January to May. However, with the restart and recovery of individual overseas plants recently, current export orders are mainly small-lot orders. While plants are scheduling deliveries for these orders, export demand still provides some rigid support. Close attention is being paid to the details of overseas plant operational changes.
On the demand side, the unsaturated polyester resin market moved upward with fluctuations this week. End-users' resistance to high-priced resources significantly increased, cooling trading activity in the market. The elastomer polyether market maintained a stalemate this week, characterized by passive cost-driven price increases that the demand side found difficult to absorb. The off-season for end-users saw no substantial improvement in demand. Inquiries in the market were scarce, and end-users harbored strong resistance to high prices. Procurement strategies remained cautious, adhering strictly to just-in-time purchasing for immediate needs. Overall, domestic demand for propylene glycol remained limited.
Looking ahead, the feedstock PO market, after consolidating in a narrow range, has some room for a downward correction, and is expected to gradually stabilize near its cost level. Currently, propylene glycol prices are hovering at a high level after the surge, but the impetus for further increases is limited. Most market participants hold a bearish outlook. It is anticipated that next week, prices may weaken and follow the feedstock cost downward trend. Continued attention should be paid to cost price guidance and plant operational changes in the market.
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