For the Quarter Ending March 2022
Diethylene Glycol market trend remained stagnant due to uncertain demand fundamentals from the downstream industry. Market of feedstock Ethylene reacts in response to the fluctuating crude oil prices in the international market. Low demand from the polyester and plastic sectors caught market participants anxious in the first quarter, resulting in dull prices of DEG. DEG prices is North America were assessed at USD 857/MT CFR Texas in February 2022. In addition, supply chain disruptions, rising energy prices, and the war between Russia and Ukraine pressurized the commodity's price, as export and import of the product in the regional market were disrupted, which resulted in weaker market sentiments.
In Asia, prices of feedstock Ethylene Oxide, rose in the first half of Q1 as energy prices rose but then fell due to improved availability of the product. In China, slight withdrawal from the downstream polyester industry caused prices to fall in the first half of the first quarter, but the market gained momentum in late Q1 as the demand gradually improved from end-users. Further, the offers for ethylene oxide increased with increased cost support from upstream crude oil, along with the geopolitical turmoil in Eastern Europe, which led to crude oil prices exceeding USD 113 per barrel. Therefore, DEG cost tumbled in February and settled at USD 787 CFR Qingdao.
In Europe, DEG market witnessed dullness in the first half of Q1, which later improved and rose by 5% in the second half of the quarter. Raw material Ethylene Oxide rose with low availability of material amidst prevalent demand to manufacture Diethylene Glycol. Demand from the downstream polyester industry turned sluggish in the first half on the back of Russia's war against Ukraine. In contrast, volatile crude oil value affected the production of the product as the raw material gained a hike, adhering cost pressure upon downstream producers. Therefore, prices for DEG in the domestic market rose in late Q1 and settled at USD 782 CFR Hamburg in March.
For the Quarter Ending December 2021
Availability of feedstock ethylene oxide improved throughout the quarter owing to increased supply of upstream ethylene after sluggish Q3. Ethylene oxide prices remained strong in Q4 although prices stabilized towards the later stages of Q4 in the wake of winter holiday season. Diethylene Glycol market witnessed increased buying interest as demand from downstream users gained momentum in Q4. Imports of Diethylene glycol also remained limited owing to strong freight charges on Middle East Asia-US trade routes and long transit time. Thus, sluggish domestic production and hampered imports resulted in snug DEG supply and consequently prices were assessed on an incessant uptrend during the last quarter. DEG prices were assessed at USD 1870 per MT in December.
Diethylene Glycol prices kept on climbing up in October, supported by firm offtakes from the domestic consumers. Rising raw material cost also supported this upward price trajectory for the product, as demand for raw material ethylene faced competition from polymers. In addition, demand for DEG remained significantly firm from downstream sectors, bolstered by festive optimism. Thus, DEG price rose significantly and settled around INR 79100/MT Ex-Mumbai in October. Ethylene Oxide prices after reaching significant highs in early November, came down towards December end due to the slowdown in downstream demand. In line with the narrowed demand and supply gap, downstream Diethylene Glycol prices in India were assessed down by nearly 10% in the initial weeks of December. In China, feedstock ethylene oxide prices dropped consistently throughout Q4 which consequently decreased cost pressure over downstream Diethylene Glycol. Inventory levels remained strong amid stagnant demand and stable operating rates which kept downward pressure on the available material. Diethylene Glycol prices in China were assessed at USD 830 per MT.
Feedstock ethylene oxide remained on a bullish rally throughout the last quarter however the pace of price increment slowed down in second half owing to improved production and stable demand. Consequently, cost pressure was firm over downstream Diethylene glycol in Q4. Demand of DEG was termed as firm stemming from increased offtakes from downstream industries. This in turn presented market participants with opportunity to increase their margins. At one instance during the quarter, prices of Diethylene glycol crossed USD 2000 per MT mark on FD basis consolidating on firm demand and weakened supply fundamentals. Imports from Middle East Asia also remained curtailed owing to strong freight charges and shipping costs
For the Quarter Ending September 2021
The domestic market strengthened across the North American region in the third quarter of 2021 and supplies for raw materials improved during the quarter due to better plant run rates after supplies remained impacted due to hurricane Ida. After increased refinery utilization in the US, an increment was observed in the supply of upstream feedstock including ethylene oxide which is used for the commercial production of Diethylene Glycol (DEG). Demand for Diethylene Glycol from the downstream sectors such as polyester resins, plasticizers, humectants, and others increased during the quarter.
The overall market outlook of Diethylene Glycol
(DEG) showcased mixed sentiments across the Asia Pacific region during Q3 2021. In the Indian market, the supply of ethylene oxide for Diethylene Glycol production was increased while the supply of Diethylene Glycol remained stagnant during the quarter. Soaring freight charges and tight availability of the material led to price fluctuations in the country. The price of Diethylene Glycol last stood at USD 929 per MT Ex-Hazira in September. The demand for Diethylene Glycol remained strong from the downstream plasticizers and humectants in Q3.
In the European region, the prices of Diethylene Glycol (DEG) witnessed a significant rise during the third quarter of 2021. Demand was under pressure in the first half of the quarter due to low consumption from the downstream industries. Soaring energy rates and high prices of EO further impacted the pricing trend of Diethylene Glycol across the region in Q3. A gradual increment in the prices of DEG was observed in August and September due to high energy rates.
For the Quarter Ending June 2021
DEG supplies in the North American region improved compared to the previous quarter, as the restoration of the industrial infrastructure in the Gulf Coast meant better availability of the feedstock, as the several producers ramped up the production rates of Diethylene Glycol in the USA. Major manufacturers such as Dow increased the run rates post the impact of winter storm Uri. However, continuous variations in the prices of upstream Ethylene on back of lacklustre demand from the downstream market maintains a stagnation in the prices of Diethylene Glycol in the second quarter. Demand outlook remained severely hampered as the offtakes from the antifreeze industries plunged amidst the offseason, however enquiries were consistent from the manufacturers of Polyurethanes, Polyether Resins, and plasticizers industries.
The overall market outlook of Diethylene Glycol (DEG) varied across different countries in the Asia Pacific region. At the starting of the quarter the demand outlook was curtailed by significant margins in the Southeast Asian region as the second COVID wave restricted the commercial and industrial activities in India, whereas there remain supply uncertainties as activity in the key trading port in Guangdong province due to rising COVID cases. Due to overall demand dullness, the overall pricing trend in India remained on a down stride throughout the second quarter with Ex-Depot Mumbai discussions settling at USD 945 per tonne in June.
Diethylene Glycol (DEG) supplies in the European region improved in the second quarter of 2021, owing to the recovery in the industrial operational rates post winter season and the restoration in the raw material supplies which restored due to better import volumes from the USA. Inquiries were piled up from the downstream polyurethanes, polyether resins, and plasticizers industry. As a ripple effect of improved supply outlook, the prices of DEG in the European market stabilized in the second quarter of 2021.
For the Quarter Ending March 2021
During the first quarter of 2021, DEG supplies were hindered as the region witnessed a downfall of 68% in upstream Ethylene production amid the rigorous freeze weather conditions in USA gulf region which forced to the regional plants to shut down. Arbitrage with the Asia improved as the domestic buyers becoming more flexible towards the Asian supplies. The demand surged from the downstream sector due to better offtakes from the various industrial segments including unsaturated polyester resin (UPR) sector.
Supplies of Diethyl Glycol remained tight for a larger part of the first quarter, as most of the upstream ethylene was diverted towards the PET manufacturing, followed by several plant turnarounds amid the Chinese lunar new year holidays in mid-February. The demand in China was seen recovering slowly after curtailed downstream unsaturated polyester resin (UPR) rates reported by some downstream convertors. Slackening demand prompted CFR China DEG rates to nose-dive to USD 500 per tonne in mid-February.
DEG supplies in the European region were sluggish during the Q1 2021, as the several refineries were operating at low production capacity amid the cold weather in Northwest European region, followed by the transport disruption in Amsterdam-Rotterdam-Antwerp route due to high water levels. Lack of supplies from USA triggered additional fears amidst importers. DEG demand in the region was stable due to the limited offtakes from the downstream sectors.
For the Quarter Ending September 2020
Dampened demand from the Polyester industry has created an oversupply of Diethylene glycol across Asia. Lack of volume offtakes have triggered a sharp slump in the pricing curve of Diethylene Glycol in the first half of 2020. Several new MEG plant set-ups planned in the Asian countries such as China and Malaysia are delayed till 2021 attributed to pandemic-induced challenges. However, with the revival in market fundamentals, prices of DEG have witnessed a progressive gain in the third quarter. Sentiments seemed bolstered with China estimated to add another downstream polyester capacity of more than 1 million tonnes and curtail its import dependence from US due to the ongoing trade war. which could result in further increase in price of DEG.
With low estimated polyester growth in North America, DEG demand growth is unlikely to keep pace with increase in supply throughout 2020. Reduction in exports due to transportation constraints has created a supply glut in the domestic market which further resulted in downward pressure in the prices of DEG in the region. Diminished demand from the downstream market, has rendered major US DEG players maintain a cautious approach over curtailed margins, thereby increasing inventories and forcing producers to induce reduction in the plant operating rates.
Following Hurricane Laura in August, around one third of production in the US was slashed down, leading to tighter product availability in Europe. Demand from the downstream industries turned better with rising enquiries from the unsaturated polyester resin manufacturers compared to the offtakes for antifreeze or coolant as the pandemic seems to take a greater toll over the downstream automobile industry.