Foreign Propylene Glycol Suppliers Announce Production Cuts and Shutdowns
Foreign Propylene Glycol Suppliers Announce Production Cuts and Shutdowns
Executive Summary
Recent months have witnessed significant supply-side disruptions in the global propylene glycol (PG) market, with major international producers announcing production halts, force majeure declarations, and plant closures. These developments, concentrated primarily in Europe and Asia, have tightened global PG supply and contributed to price volatility across regional markets.
Major Supply Disruptions
Ineos: Indefinite Shutdown of European PG Production
British chemicals giant Ineos announced that it would indefinitely shut down its propylene oxide (PO) and propylene glycol production in Europe. The decision came after the company's facilities in Cologne, Germany—including a PG plant—had been offline since July following a fire at the Dormagen chemical park substation.
While repairs at the Dormagen site are not expected to be fully completed until the first quarter of the following year, Ineos informed customers that it would not resume PO and PG production even if chlorine supplies were restored. In a letter to clients, the company cited:
"High raw material, natural gas, and energy costs, combined with PO market oversupply and weak local demand for derivatives, place Europe at a clear disadvantage compared to other regions. Furthermore, the competitive disadvantage of the chlor-alkali process for PO production compared to more efficient processes makes it impossible to justify continued production."
Ineos also indicated it would withdraw from the Cefic PO and PG working groups.
Manali Petrochemicals (MPL): Force Majeure in India
India's leading polyether polyol producer, Manali Petrochemicals Ltd (MPL) , declared force majeure and suspended operations at its Chennai Plant-1 following a complete cessation of propylene feedstock supply from Chennai Petroleum Corporation Ltd (CPCL). The disruption stems from a sovereign regulatory directive requiring CPCL to prioritize crude oil processing for LPG production to ensure domestic fuel availability amid Middle East geopolitical conflicts.
MPL relies exclusively on CPCL for propylene feedstock. The company confirmed that Plant-2 continues to operate at reduced capacity using available inventory, but the duration of the force majeure event remains uncertain.
Lotte Chemical: Advanced Plant Maintenance in South Korea
Lotte Chemical brought forward routine maintenance at its naphtha cracking facility in Yeosu, South Korea, to late March, with a complete shutdown lasting until late May. The maintenance was advanced from mid-April due to naphtha supply constraints caused by Middle East geopolitical conflicts. The shutdown affects production of basic raw materials including ethylene and propylene, temporarily impacting the stability of Asia's petrochemical supply chain.
Market Impact
These supply-side disruptions have occurred against a backdrop of tightening global PG markets. Key observations include:
Export surge from China: Chinese PG exports saw significant year-on-year growth, driven by heavy outbound shipments that left domestic factories with near-zero inventory levels.
Reduced import replenishment: PG imports into China declined month-on-month, resulting in insufficient replenishment from overseas sources.
Concentrated maintenance cycles: Multiple PG plants in Shandong and East China scheduled maintenance shutdowns, further reducing spot market circulation.
Outlook
The global propylene glycol market faces continued supply uncertainty as major producers in Europe and Asia reduce output or cease operations. Market participants should monitor:
The timeline for Ineos's permanent exit from European PG production
The duration of MPL's force majeure and feedstock supply restoration
Cost trends for raw materials (propylene oxide, propylene)
Downstream demand patterns, particularly in the resin and polyether sectors
As of late June, Chinese domestic PG prices in Shandong have experienced some downward movement, with price pressures partially offset by supply constraints from maintenance activity and export demand.
Disclaimer: This report is compiled based on publicly available industry intelligence and market data. It is for informational purposes only and does not constitute investment advice.