SunSirs: Geopolitical Tensions Were High, and Diethylene Glycol Prices Rose Sharply

Price trend

On March 3, the domestic diethylene glycol market saw a significant increase, with spot prices in East China closing at 3,720 RMB/ton, up 350 RMB/ton; and in South China at 3,800 RMB/ton, also up 350 RMB/ton. Market concerns about geopolitical factors affecting supply led to strong reluctance among holders to sell, while downstream activity was limited, resulting in insufficient momentum for further price increases and a slightly cautious market sentiment.

Fundamental analysis:

Supply: As of March 1st, the port inventory of diethylene glycol in East China was 48,000 tons, a decrease of 4,100 tons compared to the previous statistical period. This week (March 3-9), Zhangjiagang is expected to receive 13,300 tons of shipments. Although the expected arrival volume has increased, the market price has strengthened after the holiday, and with downstream industries gradually resuming work and production, port shipments may increase, resulting in minimal changes in the inventory of major ports in East China.

Demand: Downstream demand remains to be recovered. Unsaturated resin plants continued to restart during the week, with the average operating rate of domestic unsaturated resin factories at 15%, a decrease of 5 percentage points compared to before the Spring Festival (when unsaturated resin production was at 0%). The slow resumption of work and production was putting pressure on traders to ship their products. On March 2nd, the total shipment volume from the two warehouses in Zhangjiagang was 891 tons, an increase of 26 tons compared to the previous day.

Costs: Significant differences remain between the US and Iran in negotiations, and the conflict between the US, Israel, and Iran continues. Geopolitical tensions are increasing the risk of supply disruptions, leading to higher international oil prices.

Market outlook

Downstream recovery is somewhat slow, recent arrivals at ports are lower than expected, leading to a decline in inventory at major ports in East China. Geopolitical tensions have raised the risk of supply disruptions, while rising oil prices have boosted commodity sentiment. In the short term, the diethylene glycol market will maintain a strong position, and downstream purchasing sentiment is gradually recovering.

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