Entering December, the domestic ethylene glycol market continued its downward trend, with no changes in market guidance factors. Market confidence suffered an unprecedented blow, and price trends provided more feedback on the current mentality of industry players. With market operations waiting for the actual bottom to come, there has not been much discussion on subsequent trends. The market is getting closer and closer to its lowest point in March 2020, but considering fundamental factors, there is still no signal to stop the decline. Market confidence has dropped to freezing point, and it may be difficult for diethylene glycol to stop falling in the short term.
1、 Low price warning within the year
On December 1st, the domestic market price of diethylene glycol in East China fell to a new low for the year, reaching around 3030 yuan/ton, a decrease of 36% compared to the highest point of 5100 yuan/ton, and a decrease of 28.5% compared to the opening price. Compared to the historical low of 2870 yuan/ton in March 2020, there is only a difference of 160 yuan/ton; However, the significant drop in diethylene glycol in 2020 was driven by the drop in crude oil prices, which is fundamentally different from the factors affecting the current market downturn. The supply of diethylene glycol in the market is strong and demand is weak, and there will still be incremental supply in the future. However, demand is expected to be weak, and prices have been continuously declining under the dominance of bears in the market. Diethylene glycol has sounded an alarm for ultra-low prices this year.
2、 Strong supply, weak demand, difficult to stop downward trend
At present, the operating rate of domestic ethylene glycol production enterprises is at a relatively high level of over 75% this year. Although with the maintenance of about 50000 tons/year of equipment in Quanzhou, China National Chemical Corporation in late November, and the planned maintenance of about 100000 tons/year equipment in Shenghong Refining and Chemical Corporation in early December, the operating rate of ethylene glycol is expected to decrease to around 71%; However, the overall supply pressure relief is limited, coupled with the suppression of weak demand at the end of the year, the support for the ethylene glycol market is limited. And the future supply is still expected to increase. BASF plans to officially start production in mid to late January 2026, Gulei Petrochemical plans to start production in the second half of the year, and Northeast Huajin Saudi Aramco is also expected to start production in 2026. However, the demand for diethylene glycol is limited, and due to its accompanying output characteristics, there is no direct pressure on its cost, so its price decline is mainly affected by supply and demand.
Therefore, in December, diethylene glycol was still suppressed by the supply-demand imbalance, with sufficient domestic supply and high port inventory for the year; At the end of the year, it is difficult to effectively boost demand, and bearish sentiment dominates the market, making it difficult for diethylene glycol to stop falling in the short term.
3、 Market ice breaking requires waiting for the right moment
In the second half of the year, with the restart of previous equipment and the investment of new production capacity in Yulong Petrochemical, and normal operation, domestic supply reached a historical high level, and the industry’s operating rate increased to 76.94% at its highest. With the increase of domestic supply, demand has not reached synchronous growth rate, and downstream procurement remains in high demand. Diethylene glycol’s “Golden Nine” has cooled down and “Silver Ten” has suffered setbacks; The market has repeatedly experienced low prices during the new year, causing a significant drop in market confidence, with bears dominating the market. Until the beginning of this month, there was still no sign of the market stopping its decline. At present, East China is about to fall below the new low of the year, one step closer to the historical low price in March 2020, and the market’s expectation of hitting the bottom is becoming increasingly strong. However, considering the weak demand at the end of the year, as well as the current market operating rate and the planned shutdown and maintenance of equipment, the reduction in supply is limited, so the possibility of a bottoming out rebound of diethylene glycol in December may not be high.
At present, market operators are cautious and keep trading with them, waiting for the bottom of diethylene glycol to come. From the perspective of supply and demand, if there are no new maintenance facilities added this month, there is no hope of boosting demand for diethylene glycol, and the market may still need time to stop falling and break the ice. Overall, it is highly likely that as the market gradually returns after the Spring Festival, downstream demand recovery may support the gradual recovery of the ethylene glycol market.
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