Global Diethylene Glycol Prices Surge Following Hurricane Disruptions and Supply Challenges
Global Diethylene Glycol Prices Surge Following Hurricane Disruptions and Supply Challenges

Global Diethylene Glycol Prices Surge Following Hurricane Disruptions and Supply Challenges

  • 01-Oct-2024 3:55 PM
  • Journalist: Patricia Jose Perez

During the second half of September 2024, Diethylene Glycol (DEG) prices exhibited a mixed trend across the global market due to various influencing factors. In the US, DEG prices surged by 3.1%, primarily driven by disruptions caused by Hurricane Helene, a powerful Category 4 storm. The hurricane led to widespread power outages in southeastern states like Florida, Georgia, South Carolina, and North Carolina, affecting chemical demand and manufacturing operations. Key ports such as Tampa Bay and Panama City ceased operations, significantly impacting the DEG supply chain. Moreover, the energy sector faced challenges, with 25% of US Gulf oil and 20% of gas production halted, according to the Bureau of Safety and Environmental Enforcement (BSEE), further straining DEG availability.

The aftermath of Hurricane Helene is expected to increase the demand for DEG, especially as chemicals used in reconstruction, paints, and polymers become essential. This demand uptick adds to the lingering effects of Hurricane Francine, which earlier in the month briefly slowed resin production. Although resin operations in Louisiana have since stabilized, the potential for additional disruptions looms. East and Gulf Coast port workers are approaching the deadline for labor negotiations. If negotiations fail, a strike could potentially shut down key ports, including Houston, a significant export hub for US DEG.

Adding to the upward price pressure, Indorama Ventures recently announced a price adjustment of USD 0.05/lb for DEG and TEG, further impacting the local market. In response, market participants adjusted their pricing strategies accordingly. Meanwhile, INEOS Oxide declared a force majeure event affecting glycol supplies, limiting DEG sales for October 2024 to 100% of customers’ average monthly purchases from February to July 2024. Customers are restricted from borrowing future allocations or carrying over unused portions, adding further strain on the DEG supply chain.

These supply disruptions, combined with rising demand and price adjustments by major market players, have had a ripple effect on global markets. For instance, DEG prices in the European market saw a notable increase during the latter half of September 2024, with CFR prices in the German market surging by 3.8%. The impact of supply shortages in the US DEG market has spilled over to international markets, including Europe, further tightening global DEG availability.

In conclusion, analysts expect DEG prices to continue their upward trajectory into early October 2024, driven by ongoing supply constraints, strong downstream demand, and further price adjustments by key players. The DEG market is poised for volatility, with both the US and European markets likely to feel the effects of these recent developments well into the next quarter.

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