Diethylene glycol

Recent Market Intelligence Report on Diethylene Glycol (DEG)

I. Price Dynamics

1. Domestic Prices:
- As of July 8, 2026, DEG market prices exhibited volatility. Prices varied across regions and brands in China. In the East China region, DEG prices for certain brands ranged between RMB 4,343–4,500 per metric ton; in South China, prices stood slightly higher at RMB 4,380 per metric ton; and in North China, prices were RMB 4,355 per metric ton.
- Compared to the previous week, DEG prices overall showed a slight decline, with regional decreases ranging from RMB 4 to RMB 20 per metric ton.

2. International Prices:
- As of June 26, 2025, the cost, insurance, and freight (CIF) price of DEG into China was USD 512 per metric ton, while the CIF price into Southeast Asia was USD 543 per metric ton.

II. Supply and Demand Dynamics

1. Supply Situation:
- China’s DEG production volume in June 2026 is projected to have increased year-on-year; however, ethylene-based DEG output remained low due to ongoing Middle East conflicts.
- Imports: DEG import arrivals into China in June 2026 were relatively low, primarily constrained by reduced navigation efficiency in the Strait of Hormuz, resulting in limited ethylene glycol (EG) shipments. Middle Eastern supply is expected to begin arriving in earnest around late July 2026.
- As of July 2, 2026, total DEG inventories at major ports in East China declined, reflecting a relatively tight supply situation.

2. Demand Situation:
- Downstream industry operating rates showed mixed performance year-on-year, but overall remained weak. Average operating load rates for unsaturated polyester resin producers remained low; while polyester industry operations rose modestly—supported mainly by bottled beverage demand—the growth remained limited.
- Exports: DEG export volumes improved during the first half of the year; however, as DEG primarily serves domestic demand, this export uptick has had limited impact on improving the overall supply-demand balance.

III. Market Sentiment and Key Influencing Factors

1. Market Sentiment:
- Market participants are closely monitoring developments regarding Strait of Hormuz navigation status, Middle East geopolitical developments, and U.S. EG export policies—all of which directly influence DEG supply availability and pricing trends.
- In the short term, market sentiment remains cautious, with prices exhibiting range-bound, slightly bearish movement amid generally weak supply and demand conditions.

2. Key Influencing Factors:
- Cost Support: Fluctuations in crude oil prices continue to provide underlying cost support for DEG; however, recent sharp declines in international crude oil prices—driven by easing Middle East tensions—have weakened this cost support.
- Policy Factors: The Chinese government has implemented multi-tiered policy restrictions on EG capacity expansion, promoting industrial transformation toward green, low-carbon, high-end, and intensive development models—impacting the DEG market accordingly.
- Trade Flows: Global trade frictions and European producers’ protectionist trade demands are reshaping DEG trade flows. The U.S. EG industry faces oversupply challenges, with narrowing export channels; meanwhile, Middle Eastern and North American EG producers retain cost advantages, remaining primary supplemental supply sources for East Asia.

IV. Analysis and Outlook

1. Short-Term Analysis and Outlook:
- Amid fluctuations in crude oil prices, anticipated increases in imported arrivals, and persistently weak downstream demand, DEG prices are expected to remain range-bound with a slight downward bias in the near term.
- Prices may decline further as Middle Eastern cargoes arrive en masse and domestic supply increases. However, a significant rebound in crude oil prices or tangible improvement in downstream demand could provide upward price support and trigger a recovery.

2. Medium- to Long-Term Outlook:
- DEG supply-demand fundamentals in China are expected to gradually shift toward inventory accumulation in the second half of 2026; however, the pace and magnitude of such accumulation will depend heavily on the restoration timeline of Strait of Hormuz navigation, evolving Middle East developments, and changes in downstream demand.
- In the long run, advancing national initiatives toward green and low-carbon transition—as well as emerging application sectors—will present both new opportunities and challenges for the DEG market. Emerging applications—including EV coolant formulations, wind turbine composite materials, and high-performance polyurethanes—are expected to serve as critical incremental demand drivers capable of mitigating cyclical market volatility.