Propylene Glycol Price Outlook: December Witnesses a Global Descent

The pricing of Propylene Glycol exhibited a downward trajectory at the start of December in the global market, consistent with the pattern observed in preceding months. The primary factors contributing to this decline in Propylene Glycol prices can be attributed to the diminishing trend in prices of its feedstock, propylene oxide. Although the propylene oxide market remained stable yet weak at the beginning of December, the accumulation of inventory by certain factories limited the corresponding demand, consequently affecting the Propylene Glycol market in a similar fashion.

Furthermore, declining demand for Propylene Glycol in diverse sectors such as food and beverage, pharmaceuticals, and textiles in key producing nations like China and the United States has triggered heightened exports, contributing to an augmented global supply, and applying downward pressure on prices. In December, distributors were working to clear their inventories before the new year to avoid retaining surplus stock. This has resulted in price reductions, reinforcing the descending trajectory of Propylene Glycol prices. Additionally, China's consumer prices recently experienced their most rapid decline in three years, signalling escalating deflationary pressures due to weakened domestic demand, which has raised doubts about economic recovery. This decline in manufacturing costs and the accumulation of inventories, in turn, have contributed to the downward pressure on Propylene Glycol prices.

In the Eurozone, the decline in business activity unexpectedly deepened in December, according to influential surveys that strongly suggest the bloc's economy is likely in a recession. This downturn was widespread, affecting both the German and French economies, which also impacted the Propylene Glycol market. In December, French business activity declined more rapidly than anticipated, reflecting a further deterioration in demand for goods and services in the second-largest economy of the eurozone. The French economy is now visibly slipping into a recession, as indicated by the latest PMI values for December, portraying a concerning economic landscape. Contractions in both the services and manufacturing sectors have intensified compared to the previous month, negatively impacting the Propylene Glycol market. Similarly, Germany's economic downturn worsened in the same month, with contractions observed in both manufacturing and services activities, signaling a potential recession in the largest economy in Europe by the year-end. Inflationary pressures also saw an uptick at the close of the fourth quarter, as firms reported the sharpest rise in output prices in seven months, driven by a more pronounced increase in average costs. This rise in costs affected consumer confidence, contributing to a decline in Propylene Glycol prices.

As per the ChemAnalyst's forecast, Propylene Glycol prices are anticipated to sustain a downward trend in the upcoming months, primarily due to weakened demand from end-user industries. Market participants are expected to continue prioritizing the destocking of current inventories at lower price quotations, thus upholding a prevailing bearish sentiment in the global market.