Introduction: In September, the domestic industrial-grade propylene glycol (PG) market was characterized by phased divergence in demand, steady and ample supply, and cost-driven price fluctuations. Entering October, during the National Day holiday, logistics slowed as downstream factories gradually ceased operations for the break. While spot trading activity within the market declined significantly, volatility on the cost side of the industry chain did not stall with the holidays.
I. Raw Material Side: Propylene and Propylene Oxide Trend Upward Amid Volatility; Cost Support Continues to Rise
During the National Day holiday, international crude oil prices fluctuated at high levels, providing fundamental cost support for propylene. The propylene oxide (PO) market simultaneously strengthened amid similar volatility. The sustained rise in raw material prices increased cost pressures for PG producers, leading to upward adjustments in supplier offer prices and creating momentum for a potential rebound in the PG market. However, it is worth noting that cost transmission along the chemical industry chain exhibits significant lag effects. Particularly during long holidays, when downstream operations halt and trading stagnates, positive news from the cost side cannot be quickly converted into spot transaction price increases. Therefore, rising raw materials only provide bottom-level support for PG, unable to directly drive substantial market rallies. This represents the most core market characteristic of this holiday period: strong raw material pull, but no synchronous major rise in PG prices, with cost-side positives suppressed by supply-demand fundamentals.
II. Supply Side: Overall Plant Operating Rates Remain Stable
Domestic PG production in September reached 90,400 tons, with a monthly capacity utilization rate of 64.09%. During the National Day holiday, PG production units operated stably overall. Only individual units in Shandong province shut down, maintaining an average industry operating rate without any large-scale concentrated shutdowns or maintenance.
III. Demand Side: Terminal Shutdowns During Holiday; Peak Season Performance Falls Short of Expectations
During the National Day holiday, downstream factories generally suspended operations for the break. New orders within the market largely stalled, resulting in a lack of incremental buying interest and only sporadic spot transactions. The overall performance of this year’s peak season has been weak. Operating rates in the unsaturated resin industry have remained persistently low, with sluggish recovery in orders for downstream building materials and fiberglass reinforced plastic products. Furthermore, frequent price fluctuations and continuous upward trends in multiple raw materials limited pre-holiday stockpiling efforts. Regarding exports, overseas order rhythms remained stable, but customs clearance via sea freight slowed during the long holiday, resulting in insignificant export growth that could not offset domestic demand weakness. Overall, the positives generated by rising raw material costs failed to translate into actual transaction support, forcing PG prices to maintain range-bound oscillation rather than breaking out into a major rally.
IV. Market Outlook
Within this National Day cycle, the core raw materials—propylene and propylene oxide—continued to trend upward amid volatility. Strong cost support from the raw material side created expectations for a PG market rebound. However, constrained by supply-demand fundamentals, fluctuations in PG spot prices remained limited. The market maintained a range-bound oscillation pattern without extreme highs or lows, exhibiting typical characteristics of "cost-supported, demand-lagging, and narrow-range tug-of-war." From an industry chain perspective, PG pricing has shifted from unilateral determination to a game between costs and supply-demand dynamics. The upward push from rising raw materials has been offset by factors such as weak downstream demand, ample capacity, and insufficient pre-holiday stockpiling. With bullish and bearish forces relatively balanced, consolidation and oscillation have become the main theme of the holiday market.
After the holiday, the market will gradually return to normal operation, with trends continuing to revolve around the two main axes of raw materials and supply-demand dynamics. In the short term, price movements of propylene and propylene oxide remain the core indicators for the PG market. If upstream raw materials continue to oscillate strongly, cost support for PG will persist, offering potential for slight upward exploration. Conversely, if propylene and PO prices surge and then retreat, weakening cost support, there is a risk of downward adjustment in the PG price center.
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