Core market trend

In March, the domestic propylene glycol market showed a complete operational trend of rapid cost driven increase, prominent high-level supply-demand contradictions, and gradually entering a stagnant consolidation trend.
According to the Commodity Market Analysis System of Shengyi Society, as of March 27th, the average production price of propylene glycol in Shandong Province has risen from 5983 yuan/ton at the beginning of the month to 9500 yuan/ton, with a monthly increase of 58.77%, setting a new three-year high.
In terms of market rhythm, from early to mid March, the market steadily rose supported by the surge in raw materials and tight supply. After accelerating in late March, with the recovery of the supply side and the manifestation of weak demand side, market sentiment turned cautious, and the upward trend significantly slowed down, gradually entering a high-level oscillation stage.
Breaking down the market logic:
Cost side: High volatility of epoxy propane, cost support still exists but marginal weakening
The core logic behind the recent surge in propylene glycol is the strong cost transmission of upstream propylene oxide. The epoxy propane market continued to rise at a high level in March, and the supply side was affected by fluctuations in equipment and reduced volume operations, resulting in factories operating without pressure and providing rigid support for prices.
According to data from Shengyi Society, the spot price increase of epichlorohydrin is highly synchronized with that of propylene glycol, with a cumulative increase of over 58%. However, it is worth noting that propylene is the most essential direct raw material for epichlorohydrin. Affected by the supply chain disruption caused by geopolitical conflicts, the price of propylene has recently risen and fallen, coupled with a decrease in downstream acceptance of high priced epoxy propane, intensifying the wait-and-see sentiment and weakening the market’s upward momentum. It is expected that epoxy propane will show a slightly slow stabilization trend in the short term and enter a high-level digestion stage. The cost side support for propylene glycol will also shift from “unilateral upward push” to “high-level stability maintenance”, and the upward momentum will significantly weaken.
Supply side: tighten first and then loosen, resume work in the latter half of the year to alleviate the supply gap
The supply pattern showed significant differentiation in March: from early to mid month: equipment maintenance, low inventory, tight market circulation, strong willingness of manufacturers to raise prices, scarce low-priced sources, providing a solid foundation for price increases; Late stage: With the gradual resumption of production of maintenance equipment, the operating rate of equipment gradually recovers, and the market supply increases. The tight supply balance pattern in the early stage is broken, and the support of the supply side for prices is further weakened, laying the foundation for the subsequent market correction.
On the demand side, there is a clear resistance to high prices, leading to a significant decrease in purchasing enthusiasm
The weak demand side is the core contradiction that suppresses the market:
Downstream production reduction and burden reduction in domestic trade: Downstream polyether export demand weakened due to the end of tax rebate policies, and prices hit a three-year high. Unsaturated polyester resin, pharmaceuticals, cosmetics, coatings and other industries have been unable to keep up with high prices and have generally adopted measures to reduce production and burden. The focus of procurement has shifted to small orders for essential needs, and the willingness to replenish inventory has significantly decreased. Overall demand shows a trend of first increasing and then decreasing.
The performance of export orders is flat: although there is strong demand support on the export side, the overall order volume is lower than expected, making it difficult to effectively digest high priced goods;
There is a strong wait-and-see sentiment in the market: traders and downstream factories remain cautious about the high point market, and trading activity has significantly decreased, with the characteristic of “having a price but no market” gradually emerging.

Prediction of future market trends
Short term trend: large, stable, minor, high, stagnant and fluctuating
Integrated cost, supply, and demand logic:
On the cost side, epoxy propane has stabilized at a high level and still provides some support, but the price lacks a foundation for a significant decline;
On the supply side: resuming work in the latter half of the year, increasing supply, and alleviating the previous supply gap;
On the demand side: high price resistance persists, procurement enthusiasm is low, and there is a lack of continued upward momentum.
Therefore, in the short term, the domestic propylene glycol market will mainly be characterized by “large, stable, small, and stagnant fluctuations”, with a narrow range of price fluctuations, making it difficult to reach new highs, and some high-level sources may offer small discounts.
Core focus variable
Raw material trend: The stabilization progress of epichlorohydrin and fluctuations in upstream propylene and crude oil prices directly determine the strength of cost support;
Supply recovery rhythm: The progress of equipment resumption will further affect the supply-demand balance;
Changes in the international situation: external factors such as the geopolitical situation in the Middle East are transmitted to the domestic market through the energy supply chain;
Downstream demand recovery: It is necessary to observe the duration of production reduction in downstream factories and when rigid procurement will return to rational increment.
summary
The March propylene glycol market is the result of the combined effects of strong cost support, tight supply followed by looseness, and weak demand. In the early stage, a significant increase was achieved due to the surge in epoxy propane and tight supply. In the later stage, as supply recovered and demand weakened, the market shifted from a “unilateral rise” to a “high-level oscillation”.
In the short term, the price of propylene glycol will maintain a pattern of large, stable, and small fluctuations. Enterprises need to closely track raw material prices, equipment start-up, and changes in the international situation, reasonably control inventory, flexibly adjust production and procurement strategies, and avoid price fluctuation risks.