SunSirs: An In-Depth Analysis of the Reasons Behind the Ethylene Glycol Price Decline on May 22, 2026

Ethylene Glycol Prices Lowered in May

In May 2026, ethylene glycol prices experienced a significant decline. According to data from SunSirs, as of May 22, the average market price for domestically produced oil-based ethylene glycol stood at 4,903.33 RMB/ton—a decrease of 4.88% compared to the average price of 5,155 RMB/ton recorded on April 30.

Regarding port-side Ethylene Glycol (EG), as of the 22nd, basis quotes for spot contracts (minimum 500 tons) fluctuated in tandem with futures market movements. Throughout the week, intraday basis quotes for spot contracts traded within the range of +90 to +95. By the close of trading, basis quotes stood at +100 to +102 for late-May contracts, +110 to +115 for contracts covering the week after next (prior to June 5), and +135 to +137 for late-June contracts.

Domestically, ex-works prices (full truckload, tax-inclusive, self-pickup) for coal-based polyester-grade EG—sold in bulk—ranged from 4,350 to 4,450 RMB per ton.

On the international front, as of May 21, negotiated CIF (Cost, Insurance, and Freight) prices settled at approximately $623 per ton for shipments bound for China, and around $715 per ton for shipments bound for Southeast Asia.

Ethylene Glycol Port Inventory Changes: May 2026

As of May 21, 2026, the total spot inventory of ethylene glycol at major ports in East China stood at 683,000 tons. This represents a month-on-month increase of 5,000 tons compared to the 678,000 tons recorded on May 18. Furthermore, inventory levels decreased by 89,400 tons compared to the 772,400 tons recorded on April 30, and by 270,000 tons compared to the 953,000 tons recorded on March 30.

Analysis of the Reasons Behind the Decline in Ethylene Glycol Prices on May 22, 2026:

On May 22, 2026, the ethylene glycol market experienced a "double whammy," with both futures and spot prices plummeting. The benchmark futures contract suffered a sharp decline, closing at 4,587 yuan/ton—a single-day drop of 3.19%—after touching a low of 4,483 yuan/ton. Concurrently, spot prices at ports fell by 3.88% on the day, while domestic ex-truck spot prices dropped by 2.1%. This downturn represents the concentrated fallout of a confluence of factors: a collapse in cost-side support, a fundamental supply-demand imbalance, and a synchronized shift in market sentiment. The core trigger for this decline was the sudden news regarding the drafting of an agreement between the United States and Iran.

Cost Side: Geopolitical Premium Faded; Crude Oil Plunge Caused Support to Collapse

Breaking news triggered an immediate sell-off in oil prices. In the early hours of May 22 (Beijing time), media outlets—citing Al Arabiya—reported that the United States and Iran, under the mediation of Pakistan, have reached an agreement on the final draft of a deal; the details are expected to be released within a few hours. The market instantly priced in expectations of "alleviated geopolitical risks in the Middle East" combined with "the return of Iranian crude oil to the market." Consequently, Brent crude plummeted rapidly from the vicinity of $109 per barrel, shedding over 6% in intraday trading, while WTI crude breached the $100 mark—directly causing the cost-side support for ethylene glycol to collapse.

The cost of oil-based ethylene glycol has declined rapidly. Given the strong correlation between ethylene glycol and crude oil, the sharp plunge in oil prices has directly compressed the cost base for oil-based production. The "risk premium"—previously inflated by geopolitical conflicts—has been rapidly squeezed out, resulting in an overall downward shift in the price center across the entire industry chain.

Costs for coal-based production have weakened in tandem, while operating rates remain high. Domestic thermal coal prices have remained stable with a slight downward bias, leading to a recovery in profit margins for coal-based ethylene glycol producers. Plant operating rates have been sustained above 60%, with facilities such as Yulin Chemical and Qianxi Coal Chemical running at full capacity—a factor that has further lowered the floor for spot market costs.

Supply Side: High Domestic Operating Rates + Revised Import Expectations — Supply Pressure Persisted

Domestic supply of coal-based monoethylene glycol (MEG) continues to expand in volume. In May, domestic operating rates for coal-based MEG remained at elevated levels; with ample replenishment of inventory, this continues to exert sustained supply pressure on the market.

The anticipated decline in imports is lagging, and short-term arrivals still provide a buffer. Although scheduled maintenance at multiple facilities in the Middle East is expected to result in a decline in import arrivals during May and June, the impact on the actual pace of short-term deliveries has not yet fully materialized. The market has already partially priced in this "reduction in imports" in advance, thereby failing to create an immediate supply deficit.

While port inventories have been drawn down, absolute stock levels remain relatively high. Although inventories at major ports in East China are currently undergoing a continuous destocking trend, they nevertheless remain at a moderate level compared to the same period in recent years, offering only limited support to prices.

Demand Side: Polyester Off-Season + Weak End-Market — Negative Feedback Continued to Intensify

Polyester operating rates have declined year-on-year, and essential procurement has contracted. In May, the average operating rate at domestic polyester plants stood at only 75–77%, representing a year-on-year decline of 3–5 percentage points; consequently, essential procurement of ethylene glycol has contracted significantly.

Orders from downstream weaving mills remain dismal, resulting in a severe backlog of inventory. The operating rate of weaving looms in the Jiangsu and Zhejiang regions stands at a mere 66%; orders consist primarily of small-batch and quick-response requests, while downstream inventory levels remain elevated. Consequently, polyester manufacturers have proactively reduced their production loads, creating a negative feedback loop characterized by "weak demand → production cuts → reduced procurement → falling prices."

Raw material inventories have dropped to critically low levels, and market participants show no inclination to stockpile. Polyester manufacturers currently hold only 7.5 days' worth of raw material inventory—the lowest level recorded for this period in the last three years—and are limiting their purchasing strictly to meet immediate operational necessities; as a result, prices lack support from active buying interest.

Capital Flows and Market Sentiment: High-Level Profit-Taking + Breakout-Triggered Stop-Losses Lead to Amplified Decline

Following an excessive rally in the preceding period, concentrated profit-taking activity has driven market participants to exit their positions en masse. During March and April, influenced by geopolitical conflicts in the Middle East, the lead futures contract for Ethylene Glycol accumulated a substantial volume of profitable positions; subsequently, from May onwards—as expectations for a de-escalation of geopolitical tensions intensified—capital flows converged on concentrated profit-taking.

A breach of key support levels triggered algorithmic stop-losses. On May 22, the benchmark futures contract fell below the critical support level of 4,600 RMB/ton, triggering a massive wave of algorithmic stop-loss orders; this concentrated release of selling pressure from short positions significantly amplified the day's intraday decline.

Market sentiment has shifted toward pessimism, with buying interest characterized by a strong wait-and-see attitude. Amidst weak end-user demand and loosening cost support, market expectations regarding the traditional off-season in June and July have continued to deteriorate; consequently, the majority of traders and downstream manufacturers are maintaining a wait-and-see stance, reluctant to actively step in and absorb the supply.

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