China’s Market review for Propylene glycol industry highlights in 2023
1) In 2023, the price of propylene glycol fell again, the profit narrowed by 90.34% year-on-year, and the comprehensive price and profit fell below expectations
In 2023, the domestic propylene glycol market fluctuated in a narrow range. As of October, the annual spot monthly average price was 8242.45 yuan/ton, down 26.93% from the average price last year. The lowest point of the year was 6900 yuan/ton in early July, the highest point was 9700 yuan/ton in early September, and the maximum amplitude of the year was 40.58%. In 2023, the comprehensive production profit of PO transesterification propylene glycol and dimethyl carbonate significantly weakened, and the annual comprehensive average gross profit was 419.86 yuan/ton, narrowing by 90.34% year-on-year. The highest annual profit appeared in late February 1704.3 yuan/ton, the lowest profit in early July -452.5 yuan/ton, profit upside down, lack of demand support, the maximum annual profit amplitude of 476.64%. With sufficient domestic supply, but the downstream atmosphere just needs to be flat, the export season is not prosperous, it is difficult to support, propylene glycol price and cost line near the operation, profit performance is poor.
2) The new plant of Shandong Depu was put into operation, and the production capacity of propylene glycol in East China increased to 78%
In June 2023, the 69,000 tons/year dimethyl carbonate and 55,000 tons/year propylene glycol plant of Shandong Depu New Material Technology Co., Ltd. was put into operation, and qualified dimethyl carbonate and propylene glycol products were produced, marking the success of the propylene glycol device in one feed and fully transferred to the production trial operation stage. In June, the device is in continuous debugging operation.
As of the end of the year, the domestic propylene glycol production capacity was 1,080,100 tons/year, of which East China’s production capacity accounted for 78%, an increase of 1 percentage point compared with before production, and the proportion continued to increase. After the installation, the raw material cost of propylene glycol downstream unsaturated resin plant can be effectively reduced, and the upstream and downstream industry chain of propylene glycol can be improved, which is of great significance for the future adjustment of supply and demand structure of propylene glycol unsaturated resin in East China.
3) The proportion of propylene oxide by-product process increased to 7.6%, and the domestic competition pressure of propylene glycol increased
In the past two years, the domestic propylene glycol production process is mainly based on PO transesterification, accounting for 80% by the end of 2023, an increase of 2 percentage points over last year. With the production of propylene oxide such as Jiahong New Materials, Jincheng Petrochemical, Jufeng and Yangnong, the production of some by-products propylene glycol has increased. At present, the by-product process is mainly PO/SM process PO by-product and HPPO process PO by-product, accounting for 7.6% by the end of 2023, an increase of 3.99 percentage points compared with 2022. And with the increase of new plans for this by-product process in the future, it is expected that the proportion of processes will continue to increase, increasing domestic competitive pressure.
4) The export volume of propylene glycol in 2023 will reach a new high and is expected to increase by 9.45% year-on-year
The Announcement of the General Administration of Taxation of the Ministry of Finance No. 15 in 2020 has been implemented since March 20, 2020, raising the export tax rebate rate of some products, including propylene glycol export tax rebate rate to 13%, which has been favorable for exports in recent years, and the export volume has shown a significant growth trend. In 2023, the export volume of propylene glycol reached 220,000 tons, an increase of 9.45%, and the compound growth rate of export volume in 2019-2023 reached 13.2%, the overall growth rate was obvious, and the proportion of exports increased year by year, and it is expected that the future export will still show a steady rising trend.
5) Domestic consumption of propylene glycol is constrained by terminals, and the proportion of the main downstream UPR industry is reduced by 4 percentage points
In 2023, the growth rate of domestic propylene glycol demand is less than the growth rate of supply, and the consumption of propylene glycol’s largest downstream unsaturated resin industry is about 160,000 tons, and the proportion of demand continues to narrow to about 43%, which is 4 percentage points lower than that in 2022. Due to the inhibition of demand in terminal FRP, real estate and other fields, the overall capacity utilization rate of the UPR industry is near 30%, and it is difficult to have a large boost. Propylene glycol the second largest downstream elastomer polyether with the production of new devices in the past two years, the development of terminal waterproof coatings, plastic runways and adhesives and other industries, the production of elastomer polyether shows an annual growth trend, is expected to 2023 on propylene glycol consumption of about 120,000 tons, the proportion of demand reached 24%, an increase of 4 percentage points compared with 2022.