On May 6, the domestic diethylene glycol market remained in a stalemate, characterized by sideways consolidation and a cautious atmosphere regarding actual transactions. In the mainstream spot market, prices in East China closed at 7,320 RMB/ton, up 5 RMB/ton. In the South China market, regional supply remained relatively tight; however, downstream purchasing activity appeared somewhat cautious following the holiday break, resulting in prices holding steady at 7,500 RMB/ton. The CFR China price closed at $898/ton, remaining unchanged.

Fundamental Analysis:

Supply: As of May 5, port inventories of Diethylene Glycol (DEG) in the East China region stood at 18,000 tons, a decrease of 1,700 tons compared to the previous statistical period. For the current week (May 5–11), scheduled DEG arrivals at the Zhangjiagang storage area amount to 6,000 tons. Following the holiday period, downstream factories have demonstrated some expectation of restocking; consequently, shipment volumes from major ports have increased. Meanwhile, domestic supply has contracted slightly, and—amidst tensions in the Middle East—overseas imports have declined, driving inventories at major East China ports down to a historical low.

Demand: Following the holiday period, downstream factories are expected to engage in some restocking; consequently, shipment volumes from major ports have seen an uptick. According to statistics, the average operating rate at domestic unsaturated resin plants stood at 36% this week—a decline of 2.0% compared to the previous period. From April 30 to May 5, the total shipment volume from the two storage zones in Zhangjiagang amounted to 1,572 tons, with an average daily shipment volume of 262 tons.

Costs: Signs of de-escalation are emerging in the Middle East, as Iran has submitted a new negotiation proposal to Pakistan, rekindling hopes for U.S.-Iran peace talks. Compounded by a strengthening U.S. dollar and profit-taking by traders, international oil prices have declined, resulting in diminished cost support.

Market Outlook

The situation in the Middle East remains fraught with instability, and the strait remains blockaded; consequently, the risk of supply disruptions persists. Recently, port arrivals have been light, keeping inventory levels low. Following the holiday period, downstream sectors are exhibiting some demand for inventory replenishment; as a result, the diethylene glycol market is expected to maintain a stronger trend this week, and downstream buyers remain cautious in their procurement.

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