Propylene Glycol: Recent Market Dynamics, Analysis, and Forecast

I. Market Dynamics
(A) Price Trends
- Persistent price decline: Since May 2026, the domestic propylene glycol market has continued the downward trend initiated in late April. In the first half of May, the assessed reference negotiation price for propylene glycol in Shandong Province stood at RMB 8,200–9,600/ton ex-factory (cash basis; cash discounts of RMB 50–100/ton apply), representing a decline of RMB 1,150/ton from the end of April. From the April peak to date, cumulative price depreciation has exceeded RMB 2,500/ton. According to Binsuo Network data, the benchmark price of propylene glycol on May 27 stood at RMB 6,433.33/ton.
- Regional and brand price disparities: Notable price variations exist across regions and brands. For example, on May 23, Yushuo Chemical Co., Ltd. (Shandong) quoted its domestically produced propylene glycol at RMB 8,500/ton in Jinan City, Shandong Province; whereas Baitu Chemical Co., Ltd. (Nanjing) quoted its domestically produced propylene glycol at RMB 12,000/ton in Nanjing City, Jiangsu Province.

(B) Supply-Demand Situation
- Supply Side
- Rising plant operating rates: Several previously idled production facilities have resumed operations, driving a steady increase in overall domestic operating rates. In the first half of May, the industry’s average operating rate reached 74%, up 8 percentage points from April, resulting in a steady increase in available spot supply and mounting pressure on suppliers.
- Planned maintenance unlikely to meaningfully alleviate supply pressure: Although some enterprises plan to conduct scheduled shutdowns for maintenance at month-end, such measures are expected to provide only limited relief against prevailing high industry-wide operating rates.
- Demand Side
- Pronounced off-season characteristics across downstream sectors: Since May, downstream industries have exhibited clear off-season features. In the unsaturated polyester resin sector, several plants halted operations during the May Day holiday, causing industry-wide operating rates to decline by 3 percentage points compared to pre-holiday levels. Post-holiday resumption has been sluggish, with end-market demand remaining weak; downstream enterprises remain largely cautious and are purchasing only essential inventory. In the polyether sector, poor demand transmission from end markets has led to subdued spot market activity. Moreover, the export-driven production surge triggered earlier by adjustments to export tax rebate policies has now subsided, dampening polyether producers’ enthusiasm for production.

(C) Cost Factors
- Declining epichlorohydrin (epoxy propylene) prices: Epichlorohydrin prices continued falling throughout May. As of May 15, the mainstream transaction price for epichlorohydrin in Shandong Province had dropped to RMB 9,500/ton ex-factory (cash basis), down 6.86% from pre-holiday levels. This broad-based decline in epichlorohydrin prices—propylene glycol’s key raw material—has eroded cost support for the propylene glycol market, thereby reinforcing ongoing price declines.

II. Analysis and Assessment
(A) Short-Term Weakness Likely to Persist
- Sustained weak cost support: Epichlorohydrin prices may continue declining in the near term. Its two primary feedstocks—propylene and chlorine gas—have both shown signs of weakness recently, further diminishing cost support for the epichlorohydrin market. Additionally, weakening epichlorohydrin trading activity has gradually increased factory inventory pressure. With tepid end-market demand and contracting spot demand, producers are increasingly motivated to reduce inventories. Under these combined pressures—including weakening cost support, mounting supply pressure, and sluggish downstream demand—the epichlorohydrin market faces continued downside risk, which will further undermine cost support for propylene glycol.
- Ample supply to persist: Most production facilities remain stable and operational. While certain enterprises plan month-end maintenance shutdowns, given the industry’s elevated operating rates, any meaningful alleviation of supply pressure remains unlikely. Facing strong sales pressure, producers will struggle to maintain current pricing levels, increasing the likelihood of further price erosion.
- Limited near-term demand improvement: The unsaturated polyester resin sector remains in its off-season, with persistently sluggish demand from end-use sectors such as infrastructure development and real estate—offering little prospect for significant near-term recovery. Meanwhile, the polyether sector continues to be constrained by adjustments to export tax rebates and weak terminal demand, suggesting operating rates could decline further. Overall, demand-side improvement remains highly uncertain and is likely to continue exerting downward pressure on the market.

(B) Absence of Meaningful Positive Catalysts
Currently, no factors capable of catalyzing a propylene glycol price rebound are evident—such as rising raw material costs, substantial increases in downstream demand, or unexpected supply disruptions. Consequently, the market remains firmly under bearish influence.

III. Outlook
(A) Price Trend Forecast
The propylene glycol market is expected to remain weak and range-bound in the short term, with the price center continuing to drift lower. Under persistent downward pressure from falling raw material costs, rising supply, and sluggish demand, prices are unlikely to rebound and may continue declining gradually around current levels.

(B) Supply-Demand Outlook
- Supply: With industry operating rates remaining elevated, market supply will continue to stay abundant. Unless large-scale, coordinated plant maintenance or unplanned outages occur, supply pressure is unlikely to ease significantly.
- Demand: Downstream demand is unlikely to improve markedly in the near term. Both the unsaturated polyester resin and polyether sectors are expected to remain in their seasonal lull, sustaining weak demand for propylene glycol. However, demand may recover modestly in the second half of the year if macroeconomic conditions improve; nevertheless, the magnitude and pace of such a recovery remain highly uncertain.