Diethylene Glycol Prices Tumble Further Owing to Strong Inventory Levels and Sluggish Demand

Diethylene Glycol (DEG) prices continue to follow a downward trend in January after having weak Q4 2021. Inflationary pressure over Diethylene glycol have eased in last couple of months stemming from declining demand from downstream industries. Meanwhile, DEG inventories continue to grow as reported by several market participants.

Diethylene prices in India have dropped by 3.14% in January on Ex-location basis. Diethylene Glycol prices have been following a downward trajectory since the beginning of November 2021. Sluggish Diethylene Glycol demand from downstream polyester and plastic industry has resulted in declined consumption. Feedstock Ethylene oxide market has also weakened in last few months which resulted in declined cost pressure over downstream DEG. This has further deterred the market sentiment and resulted in exacerbating pricing dynamics.

Inventories levels of Diethylene Glycol were firm moving into Q4 and anticipating demand influx in coming months, market participants further increased the stock availability. However, Diethylene Glycol demand didn’t materialized in last three months of 2021 and gained little to no anticipated traction. Sluggish demand further culminated into weak destocking activities in December. This resulted in increased Diethylene Glycol inventories coming into 2022. Consequently, market participants faced double predicament of weakening demand fundamentals and strong material availability.

As per ChemAnalyst, “Diethylene Glycol market is expected to remain week in coming weeks owing to weak demand push and ample material availability. Market participants are likely to keep the price discussions on weaker note in order to destock the available inventories. However, market participants may get some reprieve and Diethylene Glycol market may observe a bullish rally towards end of Q1 and early Q2 stemming from demand recovery from polyester and plasticizer market.”