Propylene Glycol Prices Retreated After an Initial Surge, and the Tug-of-War Between Bulls and Bears Intensified

Key driving factors

Cost side: Transmission of the "inverted-V" price direction in propylene oxide has caused cost support to shift from strong to weak

Propylene oxide (PO) is the primary cost driver to propylene glycol. In September, the propylene oxide market exhibited a classic "inverted V" pattern: prices climbed steadily early in the month, driven by strong cost-side pressure and tight supplies, however fell rapidly after mid-month. The sudden easing of costs immediately deprived propylene glycol of its most critical price support, causing the market to retreat sharply during the second half of the month.

Supply side: Centralized resumption of maintenance equipment and realization of incremental expectations

The "tight spot supply" narrative that previously supported prices reversed in the second half of the month: facilities that had undergone maintenance—such as those of Baijiarui, Shenghua Jining, and Hunan Zhongchuang—successively restarted, and expectations to the commissioning of Depu’s Phase III unit strengthened. while there was a mix of shutdowns and restarts across Shandong-based facilities, overall supply showed a direction of "stability with development," resulting in a looser total supply situation compared to the first half of the month.

Demand side: The anticipated "Golden September" surge failed to materialize, with demand driven primarily by immediate needs.

Downstream operating rates to UPR (unsaturated polyester resin) stood at only around 33%; while there was a slight week-on-week increase, the absolute operating level remained low. Offers in the polyether sector were stable to slightly softer, with manufacturers offering off-list price concessions to spur orders, while downstream buyers limited purchases to immediate standards. The antifreeze market remained in its off-season. Expectations to pre-holiday stockpiling ahead of National Day and the Mid-Autumn Festival did not materialize; both traders and downstream buyers adopted a "wait-to-reduce-prices" stance, and export orders were also put on hold pending price drops. Consumption of end-consumption construction materials and coatings remained sluggish, with poor market acceptance of high-priced supplies.

Market Outlook: Under pressure and weak; the center might shift slightly reduce

Overall, the propylene glycol market faces multiple pressures in the short term. On the cost side, propylene oxide prices have entered a downward direction following a sharp surge; with prices expected to drift slightly reduce in October, cost support will further weaken. Regarding supply, units undergoing maintenance in September have largely resumed production, and with new capacity expected to come online in a concentrated manner during the fourth quarter, pressure from increased supply will persist. On the demand side, downstream stockpiling activity around the National Day holiday was limited; market performance during the peak season is likely to remain weaker than anticipated, with essential procurement driving the bulk of activity. Propylene glycol prices are expected to direction reduce in early October, though the scope to a steep decline is limited by the floor support provided by raw material costs.