Global Propylene Glycol Prices Increase Amidst Limited Supply and High Demand

The Global Propylene Glycol market witnessed a broad uptrend at the beginning of August because of the tightening of supply and increased demand from end-user sectors. As the demand increased, some Propylene Glycol manufacturers and suppliers raised the prices, which kept the market situation favorable.

Propylene Glycol is a non-toxic, water-soluble liquid additive. It is mainly used as an ingredient in food processing to enhance food's texture, taste, look, and shelf life. It is also widely used as a solvent in drug production. Propylene Glycol is mainly produced by treating propylene oxide (a chemical made by refining petroleum) with water. Recently, prices of propylene oxide have also risen due to reduced inventory levels and increased downstream industry follow-up. Thus, the uptrend in the propylene oxide feedstock market also supported the prices of Propylene Glycol.

China, which is one of the world's largest trading nations, is currently facing a severe economic crisis. Foreign risks and low production are all continued to weigh on its businesses. The country's manufacturing and trade sectors have been experiencing challenges for quite some time with China's contraction of manufacturing sentiments. Propylene Glycol supplies in China were tight, and sales of Propylene Glycol manufacturers were not under pressure. Thus, with the support of supply and demand and cost, the center of the Propylene Glycol market continued to increase.

As per the National Bureau of Statistics (NBS), China's consumer price index (CPI), a principal measure of inflation, recorded a monthly increase of 0.2 percent in July 2023 compared to the previous month. This indicates a slowdown in the inflation rate, which boosted the consumers' confidence, causing a further rise in Propylene Glycol prices. Apart from that, torrential rain and extreme heat also affected the transport networks, leading to longer delivery times and increasing shipping costs, further supporting the upward trend.

The German and US markets see a similar upward trend of Propylene Glycol prices. The manufacturing sector contracted in both US and Germany, indicating a slowdown in production activity, leading to a decrease in inventory levels and an increase in the prices of Propylene Glycol. The rise in energy and food prices due to high inflation further contributed to this upward trend. The businesses cost also increased, driven by high wages and labor costs, which led to a rise in Propylene Glycol prices.

As per the ChemAnalyst analysis, the prices are expected to remain on the higher end due to consistent demand from end-user food and pharmaceutical industries amid limited stock in the market. An improvement in trading activities is also expected in the upcoming months, which will keep the market favorable.