As 5,000 tons of domestic cargo and 1,000 tons of Taiwan cargo were successfully delivered into storage, only 2,050 tons of Canadian cargo from late August remains among imported diethylene glycol (DEG) vessel arrivals. A supply gap period for mid-to-late August is imminent. Currently, US-Iran negotiations have made no progress, with formal talks yet to resume, and navigation through the Bab el-Mandeb Strait and the Strait of Hormuz remains suspended. The Middle East situation is temporarily at a standstill, and DEG imports are expected to remain at low levels in September.
The mid-to-late August vessel arrival gap continues to deplete existing inventories, while domestic production has yet to provide effective replenishment. Spot supply continues to tighten, and DEG has shown no sign of peaking after entering the 11,000 yuan/ton level. Pricing power remains firmly in sellers' hands, with buyers following up with need-based procurement at historical highs driven by supply shortages. Additionally, the stalemate in US-Iran talks has pushed international oil prices higher, a factor that is setting the tone for the overall chemical market trajectory.
The current market presents a tight balance pattern characterized by sustained destocking and low inventory levels, with industry expectations that the destocking cycle will continue through September. Across the entire supply chain, inventories remain at low levels—whether at upstream producers' storage facilities, port inventories, or downstream unsaturated resin, polyurethane, and polyester plants' raw material stockpiles—leaving no redundant inventory to offset spot shortages. The tighten spot market conditions are increasingly evident.
China DEG Plant Operating Rate Summary (10,000 tons)
| Region | Company | Effective Capacity | Current Operating Rate |
|---|---|---|---|
| East China | Sinopec Shanghai Petrochemical 2# | 3.8 | 13.14% |
| Sinopec Yangzi Petrochemical | 3 | 0.00% | |
| BASF-YPC | 3.4 | 42.41% | |
| Far Eastern Union | 4.5 | 59.20% | |
| Fude Energy | 5 | 53.28% | |
| Sanjiang Chemical 2# | 6 | 38.06% | |
| Zhenhai Refining & Chemical | 13 | 42.52% | |
| Zhejiang Petrochemical | 19 | 98.42% | |
| Satellite Chemical | 15 | 75.85% | |
| Shenghong Refining & Chemical | 15.5 | 0.00% | |
| Yantai Wanhua | 0.24 | 55.50% | |
| Yulong Petrochemical | 8 | 88.80% | |
| Fujian Refining & Petrochemical | 4 | 58.28% | |
| Sinochem Quanzhou | 5 | 66.60% | |
| Gulei Petrochemical | 6 | 80.87% | |
| North China | Sinopec SABIC Tianjin | 4.2 | 56.29% |
| Northeast China | Hengli Petrochemical | 15 | 80.09% |
| Jilin Petrochemical | 1.59 | 10.47% | |
| Northern Chemical | 2 | 49.95% | |
| South China | Maoming Petrochemical | 1.2 | 24.70% |
| CNOOC & Shell Petrochemicals 1# | 3.5 | 59.94% | |
| Sinopec Zhongke Refining | 4 | 112.39% | |
| Hainan Refining & Chemical | 6.5 | 0.00% | |
| BASF Zhanjiang | 6.4 | 0.00% | |
| Central China | Sinopec Wuhan Petrochemical | 2.8 | 47.57% |
| Southwest China | Sichuan Petrochemical | 3.6 | 57.35% |
Source: Chempricehub
Regarding domestic DEG production units, changes to existing units have been minimal. Within the week, Hengli Petrochemical's 1# unit restarted and is running at approximately 80% capacity; attention is focused on Shenghong's restart progress. On the overseas front, Indorama's 830,000-ton unit in the United States is planned for restart. However, most units in Iran and Saudi Arabia remain shut down. The sea shipping cycle from the Middle East to domestic Chinese ports takes 20 to 30 days for ethylene glycol, meaning that even if the Strait of Hormuz were to reopen, overseas supply could not reach domestic ports in the short term. Import arrivals are unlikely to recover quickly in the near term, and the August destocking logic remains unchanged. The tight spot supply has widened the basis between spot and futures prices, and the market structure remains resilient this month.
Overall, in terms of DEG fundamentals: on the supply side, domestic production is unlikely to see significant growth during August–September. After mid-August, output is expected to rise slightly following the restart of units such as Hengli and Shenghong, but the increase is currently expected to be limited. A new northeastern unit has a planned startup in late October, and progress on its commissioning warrants attention. On the import front, the strait navigation issue remains unresolved, Middle East export volumes stay low, and imports will continue at depressed levels. On the demand side, downstream unsaturated resin operating rates remain relatively stable, but high DEG prices have prompted some substitution with ethylene glycol, reducing DEG procurement. Polyurethane is maintaining only need-based purchasing. At present, macroeconomic factors remain the primary driver of chemical market price trends, while the strong reality of tightening DEG supply fundamentals provides solid support for prices at the lower end. Prices are expected to remain in a wide range with a firm bias. Going forward, attention should be paid to short-term price fluctuations driven by any easing of the strait navigation issue.
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