Propylene Glycol Prices Show Bearish Trend in Europe Amidst Sluggish Demand

Propylene Glycol prices fell in the European region during the month of August 2023. The explanations include decreased end-user demand for Propylene Glycol and ample stockpiles among market makers and traders. Furthermore, the feedstock Propylene Oxide market also declined in the month of August 2023, leading to a drop in Propylene Glycol pricing.

The European economy has continued to weaken, as rising inflation has significantly affected people's appetite to spend, while higher interest rates have severely limited credit available for investment. Aside from interest rates, the economy suffered from lower consumption and slow industrial production, the uncertainty caused by Russia's war on Ukraine, and the damage inflicted by catastrophes such as the extraordinary floods and wildfires this summer. These issues combined undermine customer confidence, resulting in a drop in Propylene Glycol prices.

The Netherlands Manufacturing PMI (Purchasing Managers' Index) increased slightly to 45.9 in August 2023, up from 45.3 in July, although it remains in contraction for the twelfth straight month. New orders and output fell further owing to weak demand, which was largely impacted by a combination of cost and weather-related reasons, supporting the downward trend for Propylene Glycol. Companies reduced their monthly purchase activities due to reduced demand conditions and decreased production.

The Netherlands has entered a recession as exports and consumer spending have slowed due to higher interest rates aimed at containing inflation. According to Statistics Netherlands (CBS), consumer goods and services in the Netherlands were 3.0 percent more costly in August than the previous year. The inflation rate was 4.6 percent in July. The price development was primarily responsible for the drop in inflation. The inflation rate decreased in August but remains relatively high, which has maintained market demand lower, resulting in a drop in Propylene Glycol prices.

The UK economy dropped at the fastest rate in seven months as dull weather slowed consumers' spending. The Bank of England boosted interest rates by a quarter percentage point as inflation continued persistently high, which reduced demand in the UK market, causing Propylene Glycol prices to fall.

As per the ChemAnalyst analysis, Propylene Glycol prices are anticipated to decline further in September 2023 as a result of persistently weaker end-sector demand amid speculation that central banks may raise interest rates. However, at the end of the last quarter, Propylene Glycol price may increase due to ease of inflation, which would boost consumer confidence and keep the market favorable.