Propylene Glycol Procurement Intelligence Report, 2024 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Propylene Glycol Category Overview

The procurement of propylene glycol usually entails the sourcing of this synthetic organic compound, primarily for applications such as polyurethane production, cosmetics, anti-freeze, pharmaceuticals, and food additives. The global propylene glycol market is predicted to grow at a CAGR of 6.1% from 2024 to 2030. Key factors driving the growth of this industry include rising demand from food & beverages, growing usage in cosmetics and personal care products such as skin care and toiletries, expanding applications in pharmaceuticals, rising demand for petroleum-based propylene glycol, and a recent drop in crude oil prices. For instance, recently, the crude oil (brent) prices dropped from USD 91 / barrel in October 2023 to USD 80 / barrel in February 2024. This reduced production costs for propylene glycol suppliers, drove down its prices, and improved its demand from downstream industries. Market sentiment for propylene glycol also improved in this period.

Key trends impacting the propylene glycol industry include rising demand for bio-based propylene glycol, technological advancements in manufacturing processes, growing focus towards sustainability initiatives, improved demand from emerging countries, and rising usage in automotive. For instance, notable automotive companies such as Volkswagen are increasingly using propylene glycol as a coolant in its engines due to its low toxicity and efficient heat transfer. Key restraining factors of propylene glycol include rise in energy prices, increase in transportation costs, increased pressure on suppliers to set competitive prices, high R&D costs, health and safety concerns, and availability of substitutes. For instance, rise in natural gas prices and industrial electricity prices in Europe in H2 2023 led to an increase in the production costs of propylene glycol during this period.

Key technology trends and innovations driving the global polyols industry include selective catalytic propylene glycol synthesis, CO2-assisted hydration of propylene oxide, selective electrified oxidation, usage of mixed solvents, styrene monomer process, and Hydrogen Peroxide to Propylene Glycol (HPPG) conversion. For instance, Evonik adopted HPPG conversion technology in collaboration with Dow, to synthesize propylene glycol directly from hydrogen peroxide. This is a highly cost-efficient process, which produces significantly higher yield as compared to other processes and requires low energy. In the production of propylene glycol, usage of mixed solvents plays a crucial role. These solvents, often used as a combination of propylene glycol and water or other organic compounds, enhance the solubility of reactants and improve reaction efficiency. By creating a favourable environment for chemical reactions, mixed solvents help to optimize the conversion of raw materials (such as glycerol) into propylene glycol. Additionally, they help control reaction conditions, enhance yield, minimize unwanted by-products, and contribute to an efficient and sustainable production.

The propylene glycol industry is moderately consolidated and consists of a small number of global players accounting for ~50% of the market share. Key players in this industry distinguish themselves by investing in R&D, implementing sustainability practices, emphasizing product quality and safety, setting up cutting-edge manufacturing facilities, engaging in strategic partnerships, enabling supply chain flexibility, and providing customized products for specific applications. Additionally, suppliers are looking to enhance customer experience by optimizing ordering processes, improving after-sales services, and enhancing transparency regarding product specifications. For instance, The Dow Chemical Company is increasing its R&D investments to produce sustainable products and has launched a new series of propylene glycols having a lower carbon footprint and containing bio-based feedstocks. Buyers that are looking to procure propylene glycol are focusing on the sourcing of cost-effectiveness, product quality and purity, product safety and compliance, and environmental impact. Buyers in the industry have moderate-to-low bargaining capability due to a fairly limited supply base.

Raw materials, labor, equipment, packaging, and logistics are some of the key costs associated with the production of this material. Other cost components comprise rent & utilities, R&D, compliance, general and administration, sales and marketing, and taxes. Raw materials and labor embrace the largest segment of the cost structure. Key suppliers generally adopt the cost-plus pricing model for pricing their products. Key reasons affecting product prices include fluctuations in the prices of raw materials such as propylene oxide, glycerol, and catalysts (such as sulfuric acid and sodium hydroxide). Other reasons include variations in labor costs, changes in energy costs, and geographic location-based price fluctuations. For instance, in Q1 2023, prices of propylene oxide in China increased by 130 USD per metric ton as compared to its Q4 2022 prices. On the other hand, prices of propylene oxide in Brazil declined in Q1 2023 by 243 USD per metric ton as compared to its previous quarter prices. In North America, average prices of propylene oxide stood at USD 1.32 / KG in March 2024, 3.9% up from February 2024. In Europe, the average propylene oxide prices in March 2024 were USD 1.7 / KG, rising 3% as compared to the previous month.

Asia Pacific holds the largest market share in the propylene glycol industry, accounting for ~40% of the global market share. Key driving factors in Asia Pacific include growing demand from automotive and construction industries, rapid infrastructure growth, high demand from emerging countries such as China, India, and Indonesia, and favourable government initiatives. In 2023, the leading exporters of propylene glycol were Germany, China, South Korea, and U.S. The primary importers of propylene glycol in 2023 comprised France, India, and Italy. China is among one of the largest manufacturer and consumer of propylene glycol within Asia Pacific due to high demand from personal care, household care, and industrial sectors. Moreover, China is considered to be among the cost-effective countries for sourcing propylene glycol due to its cheap raw material costs, presence of skilled labor, economical labor costs, presence of large manufacturing hubs, large-scale production, economies of scale, and favourable government incentives.

Key drivers in regions such as North America and Europe include the presence of large-scale companies, high usage in industrial applications such as antifreeze and solvents, technological advancements, robust infrastructure, and a strong focus on sustainability practices. Buyers, as part of their procurement strategy, prefer engaging with reliable suppliers by signing long-term contracts, which helps them in maintaining the product quality, negotiate on pricing terms, and strengthen their ties with suppliers. Additionally, buyers also consider factors such as comparing the prices quoted by suppliers, evaluating lead time, checking years of experience, assessing product range, comparing sustainability initiatives, and assessing geographical service capabilities while shortlisting suppliers for propylene glycol procurement.

Propylene Glycol Procurement Intelligence Report Scope