Starting in 2025, the ethylene glycol capacity growth pathway will reopen as projects like the Yulong Island Refining and Petrochemical Integration Project and Ningxia Changyi come online. Entering 2026, the anticipated commissioning of new facilities such as BASF's further intensifies market expectations of long-term supply pressure.
Operational data indicates that since the beginning of 2026, the industry's average operating rate has been 62.55%. While this remains below the 2025 level for the same period, it represents a 2.14 percentage point increase compared to the corresponding period in 2024. Notably, against the backdrop of continuously expanding capacity, cumulative national ethylene glycol production reached 2.3751 million tons by the week ending February 12, marking a 1.37% year-on-year increase and hitting a recent high for this period. Concurrently, maintenance activity remained low around the Spring Festival, with plant operating rates sustaining elevated levels. The combination of high operating rates, low maintenance volumes, and record-high production levels has exerted substantial downward pressure on both futures and spot prices for ethylene glycol from the source, forming the fundamental cause of the current high inventory levels.
Affected by logistics disruptions during the Spring Festival and concentrated production cuts in the downstream polyester sector, social ethylene glycol inventories entered a seasonal accumulation phase, further amplifying the supply-side suppression effect. By the week ending February 12, domestic social ethylene glycol inventories had climbed to 2.0186 million tons, up 10.84% from 1.8211 million tons in early January, exceeding market expectations for inventory buildup. In terms of inventory structure, although import dependency has fallen below 30% in 2025, January imports saw a slight month-on-month increase due to the resumption of overseas facilities following earlier maintenance. Combined with slower port operations during the holiday period, this led to a significant rebound in inventory at major East China ports, becoming the primary driver of this round of accumulation.
Simultaneously, inventory pressure at upstream producers' facilities has gradually emerged. As post-holiday logistics recovery requires time, some coal-based manufacturers have experienced varying degrees of inventory buildup. Due to differing resumption schedules, most trading firms and downstream polyester plants will gradually return to operations after the Lantern Festival. Consequently, inventory transfer to mid- and downstream segments during the first week after the holiday was extremely limited. This indicates that in the short term, high inventory pressure will remain concentrated primarily in the upstream segment, constituting the primary market contradiction at present.
From the cost perspective, during the 2026 Spring Festival holiday, the international crude oil market exhibited an overall upward trend with volatility. Rising oil prices directly increased production costs for naphtha and ethylene-based ethylene glycol. However, due to the closure of the domestic ethylene glycol spot market during the holiday, these cost-driven benefits have not yet been fully reflected in prices. Post-holiday, ethylene glycol futures may experience a catch-up rally. Yet caution is warranted: the primary contradiction of “high inventory” may hinder smooth cost pass-through—meaning current cost support functions more as a ‘floor’ than a “driver” for prices.
Turning to the coal-based EG market, upstream coal supply faced disruptions during the holiday as private mines in major producing regions largely suspended operations. State-owned mines maintained supply but saw marginal output contraction. Concurrently, Indonesia's plan to reduce coal production to approximately 600 million tons by 2026, coupled with some miners halting spot exports, has created strong support for global and domestic thermal coal prices. This policy expectation further benefits coal-based EG production costs.
Overall, the short-term ethylene glycol market will continue to be characterized by the coexistence of high inventory pressure and cost support. High inventories, as the primary contradiction, imply persistent destocking pressure, hindering price increases. While cost support can provide temporary floor support, it is unlikely to independently drive a trend-driven market. In the medium to long term, the pattern of ample ethylene glycol supply is expected to persist throughout the year.
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