Janice R. Andrews
First of all,
Against the grain, January 2024 has seen a sharp increase in the price of propylene glycol on a worldwide level. A number of reasons have contributed to this growing trend, including the persistent demand from important downstream businesses including the food and beverage (F&B) and pharmaceutical sectors. In addition, supply chain constraints, seasonal effects, and logistical challenges are all contributing to the volatile nature of the propylene glycol market.
Influence of Raw Materials:
The cost of propylene glycol is heavily impacted by the stability and strength of the raw material market, especially with regard to propylene oxide. Cost increases caused a price explosion in the domestic propylene oxide market. Even though supply of propylene oxide were steady in January, there were still queries and purchases from downstream. Even though there weren’t many genuine market transactions, several manufacturers managed the demand on inventories by intentionally building up inventory in the middle of the month.
Seasonality with the Lunar New Year in China:
The Chinese Lunar New Year, which falls in late January, usually prompts production halts and increases demand for merchandise prior to the Christmas season. This year, pre-Christmas shopping was spurred by concerns about possible supply problems during the holiday season, which in turn caused a spike in the price of propylene glycol. The increasing pressure on pricing was exacerbated when market players decided to hoard the chemical in anticipation of the price spike in order to guarantee a steady supply.
Challenges related to logistics:
The situation is now even more complicated as a result of logistical issues. Container ship and roll-on/roll-off (RORO) operators have been compelled to relocate their boats to safer routes due to the increasing Houthi attacks on vessels in the Red Sea. This has resulted in increased freight rates and operational costs. Propylene glycol prices are rising globally as a result of these increased costs being passed on to customers in the form of higher pricing.
Challenges in Europe and the Effect of Weather:
Extreme weather is becoming a bigger problem in Europe, affecting supply chains, obstructing the movement of commodities along vital rivers, and interrupting transportation. It is anticipated that this tendency would worsen, resulting in delays and extra expenses that sustain the increasing trajectory of propylene glycol prices. Seasonal price rises are also influenced by the chemical’s increased demand in antifreeze applications throughout the winter.
Positive Consumer Attitudes in the United States:
Consumer confidence peaked in the USA in January as expectations for family earnings and inflation continued to rise. This optimistic attitude has contributed to the increased demand in downstream industries for propylene glycol, which has driven up prices.
Prospects for the Future:
Based on ChemAnalyst’s study, prices for propylene glycol are expected to continue their rising trajectory in the near future due to continued demand from end-user groups. In addition, the anticipated increase in the cost of raw materials is likely to keep the market optimistic. Stakeholders must continue to be alert and flexible in responding to the changing dynamics of the propylene glycol landscape as the global market navigates these difficulties.
