SunSirs: Ethylene Glycol Prices Stopped Falling and Stabilized in Early July

Ethylene glycol prices fell in July

In July 2026, the price of ethylene glycol halted its decline. According to data from SunSirs, as of July 9, the average spot market price for domestically produced oil-based ethylene glycol among traders was 4,346.67 RMB/ton; this represents a 1.02% decrease from the average price of 4,391.67 RMB/ton on July 1, but a 1.28% increase from the average price of 4,291.67 RMB/ton on July 2.

Prices for port-based "paper" (forward contract) mono-ethylene glycol (MEG) are primarily determined by basis pricing, closely tracking fluctuations in the futures market. As the price of July 2026 MEG futures rebounded, the basis price for port-based paper MEG remained relatively firm. As of the 9th, intraday quotes for port MEG spot contracts (minimum 500-ton lots) ranged from +144 to +156.

The ex-factory price for domestic coal-based, polyester-grade MEG (bulk, tax-inclusive, ex-works/self-pickup) was 3,630–3,800 RMB/ton.

Changes in ethylene glycol port inventories, July 2026:

As of July 9, 2026, the total spot inventory of ethylene glycol at major East China ports stood at 427,500 tonnes, a decrease of 90,000 tonnes from the 517,500 tonnes recorded on June 29.

A brief overview of the reasons why ethylene glycol prices stopped falling in July 2026:

The logic behind the stabilization of ethylene glycol prices in early-to-mid July 2026 centers on six key factors: a contraction in domestic supply, sustained and significant destocking at ports, cost-side price support, a recovery in geopolitical sentiment, strengthening spot basis differentials, and expectations of downstream restocking.

1. Concentrated maintenance of domestic plants led to a significant contraction in local supply:

Concentrated shutdowns of oil-based ethylene-integrated units: In July, large-scale ethylene glycol (MEG) units at Shenghong Refining & Chemical and Hengli Petrochemical underwent scheduled monthly maintenance; meanwhile, the restart of units at Yangzi Petrochemical and Wuhan Petrochemical was delayed. Consequently, the operating rate of domestic ethylene-based MEG production dropped to around 50%, leading to a significant contraction in the monthly volume of domestically produced material.

Peak maintenance period for coal-to-syngas units: Multiple coal-based units—including those operated by Yankuang, Zhengdakai, and Hongsifang—scaled back operations or shut down. Although maintenance for some coal-based units in the Northwest was postponed, the overall operating rate for non-ethylene-based production weakened month-on-month. The aggregate domestic operating rate remained low at 53%–56%, resulting in a decline in total monthly output and a tightening of spot market supplies.

Lull in new capacity additions: Large-scale new oil-based units are scheduled to come online primarily in the fourth quarter; no new capacity materialized in July, meaning there was no influx of new supply to impact prices in the short term.

2. Imports fell short of expectations, leading to sustained, significant destocking at ports and pushing inventory levels to a seasonal low:

Limited short-term increase in Middle East imports: Although navigation through the Strait of Hormuz resumed in June, the release of floating storage supplies of Middle East ethylene glycol was slow; arrival forecasts for China remained in the single digits during early July, and weekly arrival volumes were low. Consequently, the anticipated increase in imports materialized primarily in August, leaving the total import volume for July relatively weak.

Continued destocking at East China ports and across national social inventories: Inventories at major East China ports hit a five-year low for the period; both port and national social inventories declined in early July, with the pace of weekly destocking accelerating. Spot market liquidity tightened, eliminating any scenario where inventory accumulation would suppress prices.

Typhoon disruptions affecting arrivals: Frequent typhoons along the East China coast during July and August caused vessel delays and slowed unloading operations, further restricting short-term spot market liquidity and reinforcing expectations of a tight supply-demand balance.

3. Costs have established a clear floor, and losses are deterring manufacturers from further price cuts:

Naphtha-based route faces deep losses; producers strongly resist price drops: In early July, losses for naphtha-based ethylene glycol (MEG) briefly widened to $180 per tonne. Continued price declines are forcing refineries to further reduce operating rates and hold back sales, effectively capping the downside potential due to cost constraints.

Coal-based route sees profit recovery; no incentive for low-price dumping: With coal prices weakening during the same period, cash flows for coal-based MEG shifted from loss to profit; plants face no pressure to offload inventory, keeping spot price quotes firm.

Geopolitical tensions involving crude oil drive cost-related sentiment recovery: Tensions between the US and Iran escalated again in early July, raising market concerns about shipping disruptions in the Strait of Hormuz. Brent crude prices halted their slide and rebounded, followed by a recovery in naphtha prices; the valuation of the energy and chemical sector improved overall, boosting sentiment regarding MEG costs.

4. Spot basis continued to strengthen; traders engaged in concentrated restocking at low price levels:

Spot prices are trading at a significant premium to futures: the July spot price holds a premium of 140–165 RMB/ton over the September contract. A market pattern of "strength in the near term and weakness in the long term" has been established—driven by tight near-term spot supplies versus ample supply for later months—with spot prices halting their decline first and subsequently driving a stabilization in futures prices.

5. Marginal improvement in the downstream polyester sector during the off-season, with the market pricing in expectations for the "Golden September" peak season ahead of time:

Polyester operating rates have rebounded slightly, driven by increased procurement to meet immediate needs: In July, processing margins for polyester filament and staple fiber improved; some major manufacturers offered promotions to clear finished-goods inventory, leading to a slight rise in polyester operating rates and a modest month-on-month increase in the consumption of monoethylene glycol (MEG) for immediate requirements, thereby preventing a bottomless price collapse driven by a lack of demand.

Anticipation is building for the traditional "Golden September" peak season: The market is pricing in inventory stocking for the August–September peak season for textiles and packaging ahead of schedule; downstream manufacturers of PET bottle chips and fabrics are locking in forward raw material supplies at lower price points, with long-term buying providing price support.

6. Macro and capital sentiment inflection point; bears took profits and exited:

Previous bearish factors were fully priced in: in June, the market had already factored in all negative news—including Strait shipping issues, surging imports, the polyester off-season, and weakening crude oil prices. With no major new bearish developments in July, short-selling capital exited the market to lock in profits.

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