The chemical market in February 2025 exhibited a combination of resilience and disruption, driven by volatile feedstock prices, supply chain constraints, and seasonal demand shifts. A major winter storm, Enzo, significantly impacted operations across the Gulf Coast, leading to production outages and tighter supply for several key chemicals. Meanwhile, energy markets remained turbulent, with crude oil and natural gas prices fluctuating due to geopolitical uncertainty and weather-driven consumption. As the industry navigates these challenges, category managers and procurement professionals must remain agile to mitigate risks and capitalize on emerging opportunities.

Propylene and Derivatives

Propylene prices surged in January, with chemical-grade propylene settling at 42.5 cents per pound and polymer-grade propylene at 44.0 cents per pound, reflecting a 5-cent increase from December. The price hike was driven by supply disruptions from Winter Storm Enzo, which affected multiple propane dehydrogenation (PDH) units and steam cracker operations. Despite these challenges, demand for polypropylene (PP) and its derivatives is expected to improve. Propylene oxide also saw price increases due to higher feedstock costs and production outages, while propylene glycol markets experienced further tightness as major producers limited supply volumes. Deicing and antifreeze markets remained strong, bolstered by winter conditions, while industrial applications like resins and coatings saw stable demand.

Ethylene and Ethylene Derivatives

Ethylene contract prices climbed by 3.25 cents per pound in January, settling at 38.0 cents per pound. Inventory levels remained flat, but the market faces significant headwinds as multiple scheduled turnarounds and storm-related outages reduce supply. Ethylene demand remains mixed, with growth in surfactants and polyethylene offset by continued weakness in styrene and other derivatives. Ethylene oxide prices also increased due to rising ethylene costs and tightening supply, exacerbated by planned maintenance events in Q1. Despite these disruptions, some segments like ethanolamines and polyethylene have remained stable, while glycol ether markets anticipate further price increases due to supply constraints and rising raw material costs.

Aromatics and Solvents

Acetone markets remained stable, supported by balanced supply and consistent demand from the solvent and methyl methacrylate (MMA) sectors. However, construction and automotive applications continue to lag, limiting broader market growth. Benzene prices held steady at $3.13 per gallon in February, as inventories remained elevated despite soft derivative demand. Styrene production faced challenges due to a major Texas facility outage, leading to reduced consumption of benzene. As these supply disruptions resolve, benzene prices could rise in March if derivative demand recovers.

Alcohols and Glycol Ethers

The isopropyl alcohol (IPA) market experienced upward pricing pressure due to increasing propylene costs and slight supply constraints. P-series glycol ethers saw price hikes of $0.05 per pound, while specialty glycol ethers faced steeper increases of up to $0.15 per pound. This trend is expected to persist as propylene prices remain elevated and supply tightens. E-series glycol ethers also saw price increases, driven by both ethylene and propylene cost dynamics. With heavy plant maintenance and logistical challenges impacting inventory levels, further market tightening is expected throughout Q1.

Chlorinated Products and Inorganics

The U.S. chlorine market remained stable, but Winter Storm Enzo caused multiple production outages in Texas and Louisiana, affecting key industrial applications such as isocyanates and chlorinated solvents. Demand remained seasonally low for PVC and water treatment chemicals, keeping prices flat. Caustic soda prices held steady, though some moderate price increase announcements were made for March in an attempt to offset weak chlorine values. Global caustic soda demand remains soft, though Northeast Asian prices are showing signs of strengthening. Sulfuric acid markets remained balanced, though regional supply constraints and energy costs continue to influence pricing trends.

Crude Oil and Energy-Related Chemicals

Crude oil prices briefly spiked to $80 per barrel before retreating to the low $70s amid ongoing market uncertainty. Speculation regarding tariffs on Canadian energy products contributed to price volatility. Natural gas contracts closed at $3.535 per MMBtu, fluctuating between $3.50 and $4.25 throughout January. Cold weather in early February briefly drove up demand, but milder forecasts toward the end of the month tempered price increases. Methanol supply remained constrained due to prolonged outages at facilities in Texas and Equatorial Guinea, while demand from biodiesel producers remains uncertain due to regulatory ambiguities surrounding tax credits.

Agricultural and Renewable Feedstocks

Palm oil prices continued to decline following earlier flooding-related disruptions, as improving supply conditions stabilized markets. However, Caprylic Acid remains tight, with steep price increases expected throughout 2025. Soybean oil prices rose by more than $0.025 per pound in early February, driven by tight stocks and new clean fuel production incentives from the U.S. government. The recent tariff measures against Canadian canola oil imports have also contributed to shifting demand toward soybean oil. Beef fat tallow (BFT) values saw an additional $0.05 per pound increase, fueled by pent-up demand and renewed interest in biofuels.

Transportation and Logistics

Diesel prices increased throughout January, rising from $3.561 to $3.659 per gallon. Spot trucking rates climbed nearly 7%, reflecting tightening capacity and seasonal demand trends. Intermodal and less-than-truckload (LTL) carriers anticipate a demand recovery in Q3 and Q4, though lingering uncertainties remain. Rail negotiations in Canada resulted in tentative agreements for maintenance workers, while port congestion improved slightly, except for isolated issues in Los Angeles and Vancouver. Ocean freight rates declined slightly, with Drewry’s WCI Composite Index dropping 2% to $3,364 per 40-foot container.

Outlook for Q1 2025

As February draws to a close, market participants are bracing for continued volatility in Q1 2025. Ethylene and propylene markets face persistent supply pressures due to planned maintenance and ongoing raw material cost escalations. Demand for industrial and consumer applications will be crucial in determining market stability, while geopolitical risks and trade policy uncertainties could further impact supply chains. Category managers and procurement professionals should focus on strategic sourcing, supplier diversification, and cost control measures to navigate the shifting landscape.

The chemical industry remains poised for dynamic changes in the months ahead, balancing supply constraints with evolving demand patterns. Staying informed and adaptable will be key to mitigating risks and capitalizing on emerging opportunities throughout 2025.