This week, the domestic propylene glycol (PG) market exhibited a trend of "consolidation at high levels following an increase—then decline under pressure." As of the closing price on November 12, the ex-factory acceptance bill prices in the Shandong market ranged from 8,900 to 9,700 RMB/ton. This represents an average increase of 275 RMB/ton compared to the previous week's range of 8,550–9,500 RMB/ton, marking a rise of 3.05%. The sustained consolidation at high levels following the price increase was primarily driven by the combined effects of manufacturers' profit losses and reduced supply volumes.
I. Significant Profit Losses Among PG Manufacturers Fostered Bullish Sentiment
According to Chempricehub monitoring data, the theoretical profit for the PO transesterification method during November 2–6 was -316 RMB/ton, a decrease of 400 RMB/ton from 84 RMB/ton recorded during October 26–30, representing a drop of 476.19%. In the earlier period, major PG factories rapidly lowered their prices due to sluggish shipments and accumulating inventories. Meanwhile, the price of the primary raw material, propylene oxide (PO), remained consolidated at high levels. Consequently, the price spread between the two widened sharply, exacerbating financial losses for PG manufacturers. After PG prices fell to relatively low levels, manufacturers adopted a wait-and-see approach regarding PO price trends, showing a strong willingness to stabilize prices.
II. Sharp Decline in Operating Rates Broke Market Stalemate and Drove Prices Upward
Table 1: Domestic PG Plant Operational Fluctuations (Unit: Tons)
| Plant Name | Start Date | End Date | Daily Loss Volume |
|---|---|---|---|
| Lihua Yiweiyuan | Nov 8 | TBD | 540 |
| Qingdao Alkali Industry | Nov 9 | Nov 12 | 123 |
| Depp Phase II | Nov 10 | TBD | 252 |
Data Source: Chempricehub
This week, Lihua Yiweiyuan and Qingdao Alkali Industry successively shut down operations, while Depp Phase II operated at reduced loads. On November 11, the capacity utilization rate dropped to 48.5%. The availability of tradable PG sources in northern China gradually contracted. Furthermore, most manufacturers had concentrated orders from the previous period, resulting in no immediate shipment pressure. They actively raised ex-factory prices, driving the market center upward rapidly.
III. Multiple Factors Dragged Down PG Prices
On the cost side, while PG prices remained consolidated at high levels, the price of the primary raw material, propylene oxide (PO), continued to decline. This shifted new production profits for manufacturers from loss to gain, increasing their willingness to turn over inventory and strengthening their sentiment to ship goods aggressively.
Table 2: Changes in Domestic PO Transesterification Method Profits (Unit: RMB/ton)
| Indicator | Nov 6 – Nov 12 | Oct 30 – Nov 5 | Change Value | Change Rate |
|---|---|---|---|---|
| PO Transesterification Profit | 48 | -302 | +350 | +115.90% |
Data Source: Chempricehub
On the demand side, domestic PG prices remained elevated. Coupled with high ocean freight costs, demand for new export orders was weak, with some export-oriented manufacturers reporting a decline in foreign trade orders. Regarding domestic demand, operating rates for unsaturated resins declined, leading to strong resistance against high-priced PG. Buyers only made limited passive purchases based on rigid needs.
Additionally, on the supply side, although the expectation for a short-term restart of Lihua Yiweiyuan is low, Shaanxi-based plants began releasing external PG supplies. This impacted the Shandong and East China markets to some extent, weakening the support provided by supply-side fundamentals.
Outlook:
In summary, falling costs and persistently weak demand will drag down PG prices. A moderate release of rigid demand may occur once prices retreat to around 8,500 RMB/ton. It is recommended to monitor raw material price trends and demand follow-through closely.
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