Propylene Glycol Sees Relief But Still Tight
April 28, 2022
A softening in spot prices and increased availability for Propylene Glycol was welcome news earlier this year. Despite this, tightness of supply is still at hand in the U.S. market, and is expected to last at least through 2022.
Propylene Glycol (PG) is a downstream product of either crude oil (crude-derived Propylene > Propylene Oxide) or crude glycerin. Supply issues for both crude oil-based and glycerin-based Propylene Glycol are ongoing. Major producer Indorama has had a breakdown on a Propylene Oxide unit on April 15, which has resulted in a Force Majeure declaration from them as they are temporarily unable to supply. The higher price of crude oil, and the higher demand for propylene for other end uses such as plastic, is also affecting crude-derived Propylene Glycol. Meanwhile, there has also been a lack of availability of glycerin for bio-based Propylene Glycol. Soaring demand for soy for higher-value applications has impacted the availability as a common feedstock for crude glycerin. More recently, a ban of palm oil exports by Indonesia has suddenly restricted the global supply. Indonesia is the world’s largest exporter of palm oil, and palm oil is another major source for glycerin production.
Over the last few months, we have seen some stabilizing of spot pricing and modest increases in contract pricing. Any low prices in the market are primarily imported material, with limited availability due to global logistical issues.
Some relief for Propylene Glycol supply may not be too far off, however. Producer LyondellBasell is scheduled to bring a new PO plant online in December 2022 with the ability to produce 1 billion/lb/year of Propylene Oxide. Hopefully, this additional capacity will help alleviate tight PG supply in the U.S.
With questions about how these shifts in the Propylene Glycol market may affect your PG supply or price, reach out to a representative.