European Propylene Oxide Prices Steady as Predicted Milder Winter and Declining Gas Costs

Propylene Oxide prices in Europe have continued to stabilize over the past four weeks as weather forecasters continue to improve their prediction models on the input data points across the Baltic Sea, North Sea, and Atlantic Ocean. The latest information revealed that Europe is expected to observe a warmer winter in the year, which will result in a fall in peak winter gas delivery prices in Europe in January 2024. The chemical markets were almost affected instantly, with Propylene Oxide markets reacting instantaneously and observing bullish sentiments, and prices rose over USD 10/MT in the first week of November.

In Europe, winter continues to significantly guide the demand situation. Propylene Oxide is a major feedstock for glycols used in Polyurethane formations and antifreeze agencies in planes. While NOAA NASA predicted a relatively drier weather situation in western Europe and higher than normal precipitation in Southeastern Europe in the coming months, Propylene Oxide producers started observing a bullish sentiment, and prices of Propylene Oxide showed marginal improvement after remaining stable for a significant amount of time. Gas prices lowered for the peak winter occurring around January 2024. This sentiment resonated with Chemical producers, especially Propylene Oxide suppliers. Prices of Propylene Oxide have been inflated in Europe due to high feedstock cost pressure combined with lower imports from other countries, especially North America and Asia, which have continued to keep up the prices of Propylene Oxide, especially in the European Free delivery zone higher. Prices of Propylene Oxide in the European market are showing an uptick primarily due to increased economic potential and availability of cheaper feedstock in the winter as European gas inventory continues to stay well above the required limit. Downstream Propylene Oxide derivatives like Polyol prices were continuously observing a bearish trend on the back of destocking on the anticipation of weaker demand stabilized.

NOAA reports strong El Nino effects in the Pacific Ocean and over North American regions, with stronger high pressures in southern regions and lower pressures in Northern parts. American markets reacted similarly as Propylene Oxide prices were observing a bearish trend and began their bullish rally after the Winter forecasts revealed by NOAA. Major production sites located in the Southeastern and Southern regions are expected to have colder temperatures. Natural gas prices soared again as demand estimates increased. Propylene Oxide suppliers expect a stronger winter, and soaring energy prices have begun restocking Propylene Oxide at lower feedstock and cost pressure in the early months of winter rather than the preceding months. Demand for propylene glycols as antifreeze is also showing improvement.

ChemAnalyst continues to monitor the effects of changing prices on the production of downstream chemicals, including polyurethanes. Demand for polyurethane continues to stay weak due to high inventories and weaker demand from end-use industries, including the construction sector, as high-interest rates and construction costs continue to stall projects.