Lead-in: This week saw a shortage of imported vessel cargo, leading to a continued decline in inventory at major ports. Downstream demand remained robust, with average daily shipments exceeding 1,000 tons. Additionally, some domestic plants reduced their operating loads, tightening the domestic spot supply. The combination of decreased supply and increased demand rapidly pushed up diethylene glycol (DEG) prices. However, this rally is primarily driven by changes in demand. With spot prices already rising to around 7,200 RMB/ton, whether they can continue to climb depends on downstream acceptance.
Starting October 12, shipment rates from Zhangjiagang accelerated significantly. First, imported vessels arrived on schedule and were warehoused, increasing effective withdrawal volumes. Second, two major downstream sectors—unsaturated polyester resins and polyurethanes—had maintained low purchasing levels for an extended period, leaving them with virtually no raw material inventory. After market prices completed a reasonable downward adjustment, these industries initiated concentrated restocking, which has proven sustainable. These factors have kept average daily shipments from Zhangjiagang above the 1,000-ton mark.
Furthermore, domestic spot supply was relatively tight this month. Refineries faced shutdowns, partial product switches, or reduced operations due to technical faults, with no units increasing capacity utilization. As a result, DEG capacity utilization dropped from nearly 63% at the beginning of the month to around 60%. Given the concentration of demand, this reduction in supply had a noticeable impact.
Regarding upcoming arrivals, approximately 5,800 tons of imported cargo are expected to enter Changjiang International before the end of the month, while about 3,000 tons of domestic production will arrive at Shuntian Warehouse. Considering current demand levels, the arrivals at Changjiang International can be fully absorbed. If there are no additional domestic arrivals, inventories will continue to fall. However, the incoming shipments to Shuntian may somewhat affect the withdrawal pace at Changjiang International and Fubao terminals.
Overall analysis suggests that DEG prices do not currently have conditions conducive to a pullback. Externally, high international crude oil prices continue to support the trend of most chemical products. Internally, DEG fundamentals remain solid: total vessel cargo at major ports is limited before month-end, and some domestic units will operate at reduced loads. Overall supply shows no significant increase, while downstream purchasing retains a degree of sustainability, keeping demand stable. Additionally, sentiment feedback from buyers and sellers indicates that most market participants are preparing for prices to remain elevated, though their forecasts for further gains are relatively conservative.
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