Price trend
In March 2026, driven by rising costs and reduced supply, the domestic diethylene glycol market experienced a unilateral surge—an extreme market trend of rare historical magnitude. The benchmark price tracked by SunSirs skyrocketed from 3,393.33 RMB/ton at the beginning of the month to 7,000.00 RMB/ton by month-end, marking a single-month increase of 106.29% and leading the gains across the domestic chemical sector.
Over the course of the month, domestic diethylene glycol (DEG) prices exhibited a stepped, accelerated upward trend, unfolding across three distinct phases: steady ascent, accelerated breakout, and a final high-surge sprint. Both the absolute price levels and the magnitude of the gains reached record highs for this time of year in recent history. During the first ten days of the month, market sentiment warmed—driven by mounting expectations regarding scheduled maintenance at a facility in Fujian and a strengthening crude oil market—leading to a steady upward trajectory in prices. In the middle ten days, as the anticipated maintenance officially commenced and manufacturers, reluctant to sell, suspended trading offers, spot supplies tightened; consequently, the market entered a phase of rapid price escalation. During the final ten days, the combined momentum of rising production costs and tightening supply pushed prices to a peak, setting a new annual high. Regional markets strengthened in unison; quotes at major ports in East China and across the South China market demonstrated a high degree of correlation with Sinopec’s official list prices, resulting in a narrowing of regional price spreads and highlighting a distinct characteristic of broad-based, synchronized market growth.
Factor Analysis:
Supply Side: Significant contraction—the primary driver of market trends.
With major production units undergoing concentrated maintenance, a 700,000-ton/year integrated ethylene glycol (EG) and diethylene glycol (DEG) facility in Fujian was shut down for maintenance on March 5. The scheduled 45-day shutdown has directly reduced effective market supply, creating a temporary supply deficit. The overall operating rate of the domestic DEG industry currently stands at only 42%, marking a three-year low. Key facilities in East China—including Shanghai Petrochemical, Yangzi Petrochemical, and BASF-YPC—continue to operate at reduced loads; notably, BASF-YPC’s 340,000-ton/year unit is running at merely 40% capacity, resulting in persistently tight supply conditions. Inventories held by manufacturers are at historic lows, leading to widespread reluctance to sell, suspension of price quotes, and strict limits on order acceptance. Meanwhile, traders are focusing primarily on stocking up to meet immediate demand; with overall market inventories remaining low, they lack the capacity to stockpile, a situation that further exacerbates the tightness in the spot market.
Cost Side: Crude Oil and Upstream Markets Moved in Tandem, Providing Robust Support
International crude oil prices have been fluctuating at elevated levels. Throughout March, geopolitical conflicts in the Middle East persisted; WTI crude broke through the $100/barrel mark, while Brent crude firmly established itself above $106/barrel. This rise in costs across the oil and gas value chain has provided strong underlying support for Diethylene Glycol (DEG). The rigid pass-through of raw material costs has driven up DEG production costs, creating a positive feedback loop between costs and prices.
Demand Side: Basic Needs Provided a Floor, Exports Dove Growth
Downstream sectors were demonstrating robust essential demand; as industries such as unsaturated resins, coatings, antifreeze, and solvents resumed operations, there was active restocking to meet immediate needs. Although high prices have curbed speculative purchasing, genuine end-user demand continued to underpin spot market transactions. Furthermore, improving export orders—driven by a recovery in demand across Southeast Asia and the Middle East—were absorbing a significant volume of domestic spot supply, thereby exacerbating the tightness in the domestic supply landscape. However, as prices persisted at elevated levels, resistance from downstream sectors was becoming apparent; the rapid pace of price increases was squeezing downstream profit margins, leading industries such as unsaturated resins to maintain low operating rates (hovering around 37%). Consequently, purchasing strategies were becoming more cautious, and the willingness to chase rising prices had diminished.
Market Outlook:
In the short term, maintenance shutdowns on the supply side have yet to conclude, and the industry continued to operate at low utilization rates; consequently, the tight supply landscape remained unchanged. Coupled with support from elevated production costs, prices are expected to continue fluctuating at high levels, with limited room for any significant correction. In the medium term, as maintenance-idled facilities in Fujian are scheduled to restart, industry operating rates are expected to rebound, leading to a gradual narrowing of the supply deficit. Furthermore, the persistence of high prices will continue to dampen downstream operating rates and purchasing appetite; as support from essential demand weakens, the supply-demand balance will undergo a rebalancing process. Consequently, the upward price momentum is expected to slow significantly, and there is a risk of prices retreating from their current high levels.
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