PG Market in Q1, 2017：The Increase Range Went Down Y-O-Y

The propylene glycol (PG) went up in Q1, 2017, but the range declined from Q1, 2016. Detailed analysis is as follows.

In Q1, 2017, the Chinese PG market hit to a high level. PG prices in Shandong, East China and South China went up by RMB 900/mt, RMB 700/mt and RMB 775/mt respectively. The average increase in the three markets mentioned above was RMB 792/mt. However, the increase range in Q1, 2016 was around RMB 1,067/mt.

Except for the force of PO, there are some different reasons for the different increase in Q1, 2016 and Q1, 2017.

Supply:

First, the PG supply slid in Q1, 2017.

Though the supply in Q1, 2017 showed the same trend with that in Q1, 2016, but the overall supply volume declined in Q1, 2017 Y-O-Y.

Second, the imported PG volume increased in Q1, 2017.

In January and February 2017, the import volume of PG reached 11,137mt, which was up 33.17% from 8,363mt in January and February 2016.

On the whole, the supply from PG producers slid, but the import volume in Q1, 2017 jumped. Hence, the overall supply in Q1, 2017 was more than that in Q1, 2016.

Demand:

First, the standing material demand went down in Q1, 2017.

Influenced by the Spring Festival, the operating rate of downstream industry was low at around 30%-40% in January. In 2017, the environmental protection pressure became strict, the downstream demand was softer from 2016.

Second, the import volume in Q1, 2017 declined.

In January and February 2017, the export volume of PG was around 19,099mt while the volume reached 23,362mt in January and February 2016, down 18.25%.

On the whole, the increasing supply and weaker demand led to the smaller increase range of PG in Q1, 2017.

About the PG:

Propylene glycol, also called propane-1,2-diol, is a synthetic organic compound with the chemical formula C3H8O2. It is a viscous colorless liquid which is nearly odorless but possesses a faintly sweet taste. Chemically it is classed as a diol and is miscible with a broad range of solvents, including water, acetone, and chloroform.

It is produced on a large scale and is primarily used in the production of polymers, but also sees use in food processing as the E-number E1520, and as a process fluid in low temperature heat exchange applications.

The compound is sometimes called α-propylene glycol to distinguish it from the isomer propane-1,3-diol (β-propylene glycol).