Due to Cost Pass-Through, the Price Center of Propylene Glycol Was Shifting Upward

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According to SunSirs, the domestic propylene glycol market in the first half of September exhibited a trend of "initial weakness followed by a rapid surge," with price levels shifting significantly higher compared to the end of August; however, the primary driver was not a recovery in demand, but rather the strong upward pressure transmitted from raw material costs. As of September 14, the average production price of propylene glycol in the Shandong region stood at 10,766 RMB/ton, marking a 14.13% increase since the beginning of the month.

Key Drivers

Cost side: Propylene oxide prices remained high, providing support, though the marginal support was weakening.

The cost of propylene glycol is closely linked to that of propylene oxide (PO). In early September, the strong performance of PO provided a cost floor to propylene glycol and served as a key driver of the recent price rally; however, market expectations suggest that while PO prices were strong early in the month, they are likely to weaken gradually toward the end, leading to a marginal easing of cost support. Consequently, the cost side is unlikely to drive any further significant surge in propylene glycol prices. With fluctuations in propylene feedstock remaining limited and the cost floor intact, the scope to a sharp price decline is constrained in the short term.

Supply side: immediate maintenance caused disruptions, while expectations of increased output from resumed production exert downward pressure.

Early-stage maintenance at production facilities led to tight spot supplies, and holders' strong resistance to lowering prices drove the market upward; however, the phased restart of some units in the latter part of the month—raising expectations of increased supply—capped the upside possible.

Demand side: Expectations to the "Golden September" peak season fell short of materializing; demand was driven primarily by immediate needs, and inventory stocking remained conservative.

Despite the arrival of the traditional "Golden September" peak season, the recovery of downstream orders remains sluggish and the increase in operating rates limited; the resin and coating products sectors are maintaining a "buy-as-needed" approach based on essential demand, while the antifreeze sector remains in its off-season. Overall demand development is limited, constraining any broad, substantial market rally.

Market Outlook

In the short term, as previously idled units gradually resume production and supply is released, expectations of looser supply are materializing; absent a significant surge in demand, prices are facing downward pressure and trending reduce. While a further unexpected strengthening of propylene oxide—combined with delayed production restarts—could prolong the period of high-level fluctuation, a significant further spike in prices remains unlikely.

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