Surplus Inventories to Keep the Prices of Propylene Glycol Stable in Asia Pacific Market During February

The Propylene Glycol market is heading towards stagnancy in the running month on account of the supply abundance of USP grade Propylene Glycol which is primarily used as a drug solubilizer in the pharmaceutical industry and as an additive/flavouring agent in the food sector.

The stable market scenario consolidated from the long-sought bearishness in Propylene Glycol prices that had seeped in during the December-closing to January-starting weeks with relaxation in inflationary pressure from falling raw material prices in the international market, thereby boosting the productions in the Asia Pacific region. However, contrary to the expectations, the demand fundamentals did not pick up steam in the new year due to restricted downstream activities amid resurging Covid cases, consequently causing the market to witness a supply glut.

China, which is a major manufacturer and exporter of Propylene Glycol witnessed mulled spot purchasing activities as downstream buyers refrained from filling up inventories and adopted a wait-and-see approach ahead of the Chinese New Year holidays prompting the manufacturers and traders to resort to lower side price corrections in order to clear the available stocks. Meanwhile, in India where the demand fundamentals remained consistent, the traders prioritized procuring sufficient Propylene Glycol through imports from China and other middle east countries to build up stock for February, foreseeing the decline in imports from China during the two-week Chinese New Year holidays. The domestic manufacturing unit operating at over 90% capacity utilization also supported in establishing sufficient Propylene Glycol supplies in the country. “We have ample availability of Propylene Glycol USP grade, hence, the prices will remain same throughout the current month” -quoted an Indian trader.

As per ChemAnalyst, the availability of inventories shall enable surplus supplies of Propylene Glycol to the downstream industries causing minimal fluctuations in the price trends.  Muted downstream demand and halts in productions during the Lunar year breaks is expected to result in mulled spot purchase activity in China. Meanwhile, India, being immune to the lack of Chinese imports in February, are expected to witness a demand-supply equilibrium with sufficient inventories to cater to a month’s worth of downstream enquiries. However, both the countries are expected to see a surge in the Propylene Glycol market in the next month with exhausted inventories in the wake of a score of deliveries and commitments to fulfill.