The phase of a weak market structure is concluding, allowing diethylene glycol to undergo rapid adjustment.

Lead-in: Large vessel arrivals are winding down, marking the end of the downward trend. Downstream buyers may concentrate their replenishment efforts in the near term. Diethylene glycol (DEG) is entering a rapid adjustment cycle. The maximum inventory level for the month is projected to be around 21,500 tons; this level currently does not pose significant pressure. Market participants are closely monitoring downstream procurement activities.

Shipments have been arriving sequentially this month. From the National Day holiday period through October 15, a cumulative total of 28,000 tons was unloaded at major East China ports. Inventory levels at Yangtze International and Fubao rose to 20,700 tons, reaching the highest point in nearly six months.

Table 1: Vessel Arrivals at Major East China Ports in the First Half of October (Unit: Tons)

External supply has materialized. On the domestic front, the overall operating rate for DEG production is currently around 63%, which is relatively high for the second half of the year. Continuous release of domestic supply has effectively alleviated the previous tightness in spot availability. Meanwhile, downstream demand is also in an incremental phase. Current price levels have significantly reduced cost pressures on downstream users, leading most factories to resume using DEG. Additionally, low raw material inventories within these factories mean that phased increases in demand can offset the pressure from rising internal and external supplies.

Based on this week's market trends, the decline from 6,000 RMB/ton to approximately 5,650 RMB/ton exceeded some market expectations. Some downstream factories held off on concentrated purchasing while waiting for vessel unloading and further market developments. However, by the end of the week, the market absorbed the drop and adjusted upward rapidly. Under the "buy on rise, avoid on fall" sentiment, downstream participation increased. Furthermore, considering downstream production cycles, there is a degree of sustained demand within factories, suggesting that future supply-demand dynamics could shift toward decreasing supply and stable demand.

Current DEG trends can be summarized as follows: The spot market remains relatively calm. Premiums in broader commodity markets have little correlation with DEG, with demand variables providing support to the market. Regarding futures, the long-term trend of widening DEG supply-demand balance is clearly defined. Holders of inventory remain restrained, and cautious sentiment prevails amidst divergent bullish and bearish views. For November and December, three key factors will simultaneously determine market changes: the fulfillment of Middle Eastern contracts, new additions and restarts of domestic units, and the sustainability of downstream demand.