Chinese PG Market Was Range-bound ( Dec 18-22, 2017)

Chinese PG Market

During December 18-22, 2017, the Chinese propylene glycol (PG) market increased slightly and then was range-bound. From the raw material side, the propylene oxide (PO) market ran upwards continually. The mainstream negotiation price of Chinese PO in Shandong was in the range of RMB 13,100-13,300/mt, up 7.4% W-O-W. As a result, the production cost in PG factories was on a high level. Furthermore, as the PG factories had no inventory pressure, producers were willing to increase PG price. From downstream side, the operating rate in unsaturated Polyester Resin (UPR) industry was stable. As the Chinese maleic anhydride market decreased, the increasing rate in UPR industry became slow. Downstream users showed resistance to the high prices of PG. Moreover, the Chinese PG price was as similar as the prices of import PG and methylpropanediol, so part of holders chose to purchase the cheaper one according to the prices. So, players in downstream market showed bearish sentiment to the market.

Forecast

At present, the PG factories had no inventory pressure. As the New Year is coming, the downstream users will stock goods before the holiday. The supply of PO will be tight and the PO market will run upwards. The production cost will increase continually, which will cause the PG factories to suffer cost pressure. It is predicted that the Chinese PG market will increase in the short term. From the demand side, the rigid demand for PG will be limited. The high-priced orders will be rare. Influenced by the import PG and methylpropanediol, the demand for Chinese PG will decrease obviously. Under the limited demand, it is predicted that the Chinese PG market will suffer resistance to increase and most factories will maintain the prices.