Shandong Yulong Petrochemical's Phase I 800,000-ton/year ethylene glycol facility successfully completed trial runs in September 2025 and was incorporated into the production capacity base on October 9, 2025, elevating China's ethylene glycol industry capacity to 31.542 million tons. Regionally, East China remains the primary production hub. Following Shandong Yulong Petrochemical's commissioning, East China's share of China's total EG capacity rose to 46.79%. Ningxia Changyi's 200,000-ton/year unit underwent trial runs in November 2025 and began output in early December 2025, though it is not yet included in the capacity base.

Increased Maintenance Scale, No Significant Rise in Ethylene Glycol Output

In December, China's ethylene glycol output is estimated at 1.7772 million tons. Of this, ethylene-based ethylene glycol production is estimated at 1.1221 million tons, while synthesis gas-based ethylene glycol production is estimated at 655,000 tons. New ethylene glycol units successfully commissioned in December are currently undergoing commissioning, resulting in limited realized supply increases. Additionally, year-end shutdowns for maintenance at some facilities have led to increased supply reductions. Consequently, ethylene glycol production did not see a significant increase in December.

The average operating rate for the ethylene glycol industry this month was 61.07%, down 1.82 percentage points from the previous period. The average operating rate for ethylene-based ethylene glycol production was 64.94%, down 2.92 percentage points; the average operating rate for synthesis gas-based ethylene glycol production was 55.22%, down 0.17 percentage points. Key facility changes this period included shutdowns for maintenance at Fude, Shenghong, Rongxin, and Zhongkun plants. China Shell, Zhongke, Hongsifang, and Zhengdakai plants resumed operations after brief maintenance outages. Huajin, Weixing, Yulong, Yuandonglian, Gulai, Hainan, Zhonghua Chemical, and Sanjiang plants made minor capacity adjustments. Huayi plant restarted but has yet to produce output.

Port arrivals were concentrated, but shipments remained acceptable, with inventories sustaining a slight increase.

In December, the average ethylene glycol inventory level at East China ports (excluding Ningbo Port data) stood at 587,000 metric tons. End-of-month inventory reached 600,500 metric tons, an increase of 60,000 metric tons from the previous month-end. The daily average shipment volume at Zhangjiagang Port remained around 5,750 tons this month. While the apparel and textile sectors entered their off-season in December with gradually declining orders, the polyester segment has not yet seen large-scale shutdowns or production cuts. Polyester operating rates remained high, supporting reasonably stable port shipment data. However, under the influence of concentrated port arrivals, East China port inventories continued to rise slightly in December.

Peak Season Gradually Ending; Downstream Orders Contract and Loom Utilization Declines Significantly

At month-end, polyester operating rates stood at 88.81%, down 0.38 percentage points from the previous month. As the textile and apparel sectors entered their off-season in December, shrinking downstream orders led to a gradual decline in loom utilization. With relatively low finished goods inventory pressure in the polyester segment and fewer maintenance shutdowns during the month, polyester operating rates remained elevated. Looking ahead, polyester operating rates are expected to gradually decline toward year-end lows before the Spring Festival. Estimated polyester production for the next three months is projected at 6.5 million, 5.7 million, and 6.9 million tons, respectively.

December saw continued weakening in weaving market demand. Following significant cost increases toward month-end, some enterprises advanced their Spring Festival holiday schedules.

Coal prices corrected downward, but ethylene glycol prices declined during the month. Profit margins rebounded modestly, with China's coal-to-ethylene glycol production margins showing slight improvement this month.

Overall, as the first quarter of 2026 approaches, downstream polyester operating rates are expected to gradually decline to annual lows due to the approaching Spring Festival holiday. With limited reductions in ethylene glycol supply, the supply-demand structure maintains expectations of expanding inventory accumulation. After the Spring Festival in March, downstream operations will gradually resume, easing inventory pressure and shifting toward destocking. However, current projections indicate only modest destocking in March, with the first quarter overall maintaining expectations of significant inventory accumulation.

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