European Propylene Oxide Prices Rebound Amidst Ample Stocking In January 2024

Hamburg (Germany): Propylene Oxide prices rebounded in January 2024 amid the Suez Canal logistics crisis and a marginal improvement in Asian demand for Lunar New Year restocking. The Suez Crisis continues to exert significant supply pressures across multiple commodities, including feedstock propylene, propylene oxide, and benzene along the Asia-European Sea Lanes of Communications. Prices continue to rise during this period despite Maersk and other shipping companies adding newer freights and capacities to tackle the challenges. However, market intelligence reports indicate that ports are currently congested across major destinations. In this context, Propylene oxide markets are experiencing price increases after remaining subdued and largely stable over FY23.

In European markets, challenges for Propylene oxide suppliers have multiplied amid adverse winter temperatures, flooding in Northern Europe, and feedstock shortages. These factors have forced propylene prices in German markets to rise by 42% on a month-on-month basis. Freight and Ocean intelligence suggest that freight charges surged by 300% in January, inducing mixed reactions among global suppliers. Another major factor, according to market participants, revealed that the drastic rise in propylene oxide prices was largely due to domestic challenges in European markets. The Netherlands Chemical Association and VCI Germany have warned that rail strikes across Germany are affecting supply lines for major chemicals. Propylene Oxide downstream markets like propylene glycol and polyol ethers are showing a surge in demand during this timeframe amid a winter shopping spree in Italian, French, and other major European markets. Consumer sentiments have strengthened, with demand showing an uptick and demand pressure for propylene oxide from propylene glycol turning positive, largely owing to the fall in inflation and energy costs. Surprisingly, British markets are showing a stellar recovery in propylene oxide prices amid falling mortgage rates, as inflation continues to decline at a faster pace. Competitive premiums from cosmetics and homecare verticals, coupled with stable demand from the Polyurethane markets, are largely attributed to sustainable transition activities. Polyurethane markets in Europe, though remaining subdued amidst high-interest rates, continue to be major drivers for Propylene Oxide and MDI markets through government interventions.

In Asian Markets, propylene oxide markets show mixed sentiments. Domestic supplies in China and East Asia are facing propylene feedstock shortages largely owing to delayed deliveries, higher lead times, and high input costs. This has forced propylene oxide suppliers to keep their feedstock inventories down, reflected in the slowing down of newer orders, as market participants revealed. While import volumes of Propylene Oxide are showing an uptick in the market, demand for Propylene Glycol is increasing largely from a consumer perspective. While Polyurethane markets are still subdued, Indian markets are observing strong restocking demand, leading to a strong pull-up in Indian prices. Korean Polyurethane demand is picking up amidst government promises of support for the construction sector and energy transition initiatives. The major recovery in propylene oxide prices is anticipated largely for Lunar New Year holidays in East Asia, with demand driven largely by consumer sections. Noto Earthquake rehabilitation measures and the government's support for energy transition and new construction demand may offset the expected fall in demand for propylene oxide from the Polyurethane vertical this year, as global governments are expected to withdraw significant subsidies.

ChemAnalyst internal study and forecast continue to support stable and marginal recovery in Propylene oxide prices at current demand levels till H1 FY24, while Polyurethane markets are anticipated to recover at a faster pace in FY25.SEO details