According to monitoring data from Business Society, as of December 31, 2023, the reference market price for domestically produced industrial grade propylene glycol was 8300 yuan/ton. Compared with January 1 (reference price for propylene glycol was 7400 yuan/ton), the price increased by 900 yuan/ton, an increase of 12.16%. The overall market situation of propylene glycol in China in 2023 showed a wide range of fluctuations. Throughout the year, the lowest point of the price reference was 7133 yuan/ton, with a maximum decline of 26.90%.
What will be the market situation for propylene glycol in 2024?
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Firstly, let’s review the market trends of propylene glycol over the past three years. From the comparison chart of market data from Business Society, it is clear that in 2023, the domestic propylene glycol market has shown a significant decline compared to the market in 2021. In 2021, the price of propylene glycol in the market was almost always above 15000 yuan/ton, and the propylene glycol market was also at a high level in the first half of 2022. In the second half of 2022, The propylene glycol market is gradually falling to a low level. Therefore, in 2023, the propylene glycol market started at a low level. Although there was a significant fluctuation throughout the year, the market still failed to break through the 10000 yuan mark, with a tight increase of 12.56% throughout the year.
In terms of production capacity: In 2023, the overall production capacity of propylene glycol units in China has been improved. In June 2023, Shandong Depu New Materials Company successfully completed the production of 69000 tons/year of dimethyl carbonate and 55000 tons/year of propylene glycol units. The production capacity of propylene glycol units in the East China region has increased to 78% in the country. As of the end of 2023, the production capacity of domestic propylene glycol units is based on 1.08 million tons per year. The increase in propylene glycol production capacity is a double-edged sword. On the one hand, in the past two years, the overcapacity of propylene glycol in China has become apparent, and the increase in production capacity will bring certain supply pressure to enterprises. On the other hand, the improvement of propylene glycol production capacity is more conducive to the comprehensive development of the propylene glycol upstream and downstream industry chain, and the overall improvement of propylene glycol production capacity is also more conducive to the profit and loss control of the propylene glycol upstream and downstream industry chain.
In terms of supply: At present, China’s propylene glycol production is mainly based on the propylene glycol/dimethyl carbonate co production process and the epoxypropane hydration method. Among them, the PO ester exchange method of the dimethyl carbonate/propylene glycol co production process has a certain production cost advantage compared to the epoxypropane hydration method, and the main production enterprises are concentrated in provinces such as Shandong, Anhui, and Guangdong. By the end of 2023, the PO ester exchange method accounted for 80%, a slight increase compared to last year. In 2023, with the increase in domestic epoxy propane production capacity, the overall production of its by-product propylene glycol has also increased. Therefore, in 2024, it is expected that there will be significant supply side competition in the propylene glycol market, and the supply pressure on factories will also increase accordingly.
Export: China is one of the world’s major propylene glycol exporters. The top three countries and regions for China’s export are Türkiye, the United Arab Emirates and Indonesia. Announcement No. 15 of 2020 issued by the Ministry of Finance and the State Administration of Taxation will be implemented from March 20, 2020, increasing the export tax rebate rate for some products, with the export tax rebate rate for propylene glycol increasing to 13%, which is a favorable policy for propylene glycol exports. From January to November 2023, the export volume of propylene glycol reached 188400 tons, a year-on-year increase of 9.45%. From 2021 to 2023, the proportion of propylene glycol exports has been increasing year by year. It is expected that the export of propylene glycol will continue to show a growth trend in 2024.
In terms of demand: In 2023, the overall demand performance of the propylene glycol market is average, with insufficient support from the main downstream consumer sectors of propylene glycol, and a low operating rate in the downstream unsaturated resin industry. The proportion of downstream UPR, the main force of propylene glycol, in the industry has also decreased in 2023. Due to weak demand in terminal fiberglass, real estate and other fields, the overall capacity utilization rate of the UPR industry is low. In 2024, with the continuous recovery of the downstream terminal market and the production of new devices in the downstream propylene glycol elastomer polyether market, the market demand for waterproof coatings, adhesives and other fields in the terminal application market will be boosted. Therefore, it is expected that the overall downstream demand in the propylene glycol market will increase in 2024.
In summary, the propylene glycol data analyst from Business Society believes that the domestic propylene glycol market in 2024 will be a year of both opportunities and challenges. In terms of market challenges, the pressure on the propylene glycol supply side is still present, and downstream demand is also concerned. For market opportunities, the deployment of new raw material production capacity for propylene glycol and the production of new equipment for propylene glycol itself will bring new supply-demand distribution to the market. The demand side also has expectations, combined with the positive effects of exports on the market. It is expected that in 2024, the domestic propylene glycol market will mostly warm up and grow step by step.
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