China DEG Market Mid-July 2026 Analysis | Near-Decade High Prices & Ultra-Low Port Inventories

Market Price Trend: Sharp Rally Followed by Mild Pullback

Diethylene glycol (DEG) spot prices in East China hit a rare peak in mid-July before correcting slightly, while South China maintained an upward trend with clear regional differentiation. As of July 21, mainstream DEG spot prices in East China stood at RMB 9,100 per ton, falling RMB 60 from the previous trading day. In contrast, South China prices climbed to RMB 8,200 per ton, up RMB 50 amid sustained tight local spot supply.

The market saw an unprecedented price surge on July 14, when East China DEG reached RMB 9,330 per ton, marking a near-decade high. Prices gradually softened afterward: RMB 9,200/ton on July 15, and further down to RMB 9,100/ton by July 21. On the international trading side, CFR China import prices also retreated from USD 1,103/ton on July 14 to USD 1,083/ton on July 15.

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Core Drivers Behind Current DEG Price Volatility

The extreme price swing is jointly shaped by tight supply, sluggish downstream consumption and cross-regional supply imbalance.

Supply Side: Historic Low Port Inventories & Multiple Supply Disruptions

The major trigger for the price rally is severe spot supply shortage. East China port inventories kept sliding to record lows: the figure was 4,300 tons on July 13, a drop of 2,300 tons sequentially; major port stocks hit 5,600 tons on July 9, with Zhangjiagang Fubao Warehouse only holding 1,400 tons. By July 20, total port inventory further shrank to merely 3,600 tons.

China’s DEG import volume slumped sharply as well. April imports reached only 5,800 tons, plunging 83.75% month-on-month, while January-April cumulative imports declined nearly 20% year-on-year. Geopolitical tensions in the Middle East continuously disrupted global shipping logistics and import deliveries.

Domestic plant maintenance schedules aggravated tight supply. Shenghong Petrochemical suspended production at the end of June and plans to restart in late August; Hengli Petrochemical will shut one unit for around one month starting mid-to-late July. Meanwhile, partial production restarts brought limited supply relief: CNOOC Shell resumed operation on July 5, and Fujian Gulei came online in mid-July. Overall national DEG operating rates remained suppressed at roughly 50.49%. In addition, Typhoon Bavi delayed loading, unloading and vessel arrivals along coastal Zhejiang and near-sea trade routes, further worsening spot stock shortages.

Demand Side: Flat Off-Season Consumption with Hand-to-Mouth Purchasing

Downstream sectors failed to provide strong price support amid weak seasonal demand. As of July 9, the average operating rate of domestic unsaturated polyester resin (UPR) plants stood at 32%, down 1 percentage point sequentially; polyester plant load stayed steady around 82%. Daily average consumption from two core Zhangjiagang warehouses was only about 300 tons, and most downstream buyers only purchased raw materials to meet immediate production needs without proactive stockpiling.

Widening Regional Price Gap Between East and South China

A striking regional price divergence emerged across China, with the gap once expanding to nearly RMB 1,500 per ton. East China maintained high prices backed by ultra-low port inventories and scarce spot goods. In South China, the restart of local production lines including CNOOC Shell and Gulei Petrochemical eased supply pressure, resulting in a notable price discount versus East China markets.

Short-Term Market Outlook: High-Level Volatility with Downside Risks

At present, bullish and bearish factors offset each other, leading to expected wide price fluctuations at elevated levels in the near future.

Bullish Supporting Factors

Port inventories remain at historic lows and cannot recover rapidly in the short term; continuous maintenance at Shenghong, Hengli and other production units keeps domestic supply constrained; uncertain U.S.-Iran geopolitical relations may create new obstacles to subsequent import cargo arrivals.

Bearish Pressuring Factors

A batch of imported vessels is scheduled to unload at Zhangjiagang between July 21 and 27, bringing 9,600 tons of DEG to replenish port stocks; the full operation of restarted plants including CNOOC Shell and Gulei will add domestic supply volume; downstream polyester and UPR industries enter the traditional off-season, with factory operating rates set to decline further.

Comprehensive market analysis indicates DEG prices will maintain high-amplitude volatility in the coming weeks. As concentrated imported cargoes arrive and more production units resume operation, the current price high will face gradual downward correction. Market participants need to closely track three key indicators: vessel arrival schedules, factory maintenance and restart timetables, and latest U.S.-Iran geopolitical developments.

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