After the haze of the July oscillation and correction lifted, ethylene glycol completed a strong reversal in August and embarked on a unilateral bullish single-session trend characterized by rising volume and price. Entering September, the market jumped again and accelerated its breakthrough. Under the combined drive of geopolitical disturbances locking in import restrictions, weak domestic supply recovery, ultra-low inventory across the entire industry chain, and the strong demand during the Golden September season, ethylene glycol completely entered a super strong cycle of tight spot premiums, significant increase in basis, and continuous forced selling in the near month. This round of trend is not a short-term emotional speculation, but an industry-level trend formed by the combined factors of supply gap, cost increase, inventory collapse, and expectation reconstruction.
Off-Season Reversal and Unexpected Strength in August
Throughout August, the ethylene glycol market experienced a typical off-season reversal and unexpected strong performance. The monthly price range widened significantly, with the main price range operating between 5,014–6,344 yuan/ton, with a monthly average of 5,508 yuan/ton, and a monthly increase of 17.43%. It led the gains in the entire polyester chemical sector and completely reversed the weak correction in July, completing a trend reversal. This August's rise was not driven by a single factor, but by the triple hard logic of supply contraction, cost increase, and continuous inventory collapse.
Supply Contraction: Concentrated Plant Outages
Domestic plant outages were concentratedly implemented, and the supply side continued to shrink. The average monthly ethylene glycol production capacity in China was only 54.43% in August, remaining in the low range of the year, with insufficient effective capacity release, and the increase in domestic spot supply was continuously limited. Under the large cycle of industry capacity surplus, the rapid change in short-term supply and demand structure brought by the phased concentrated outages quickly changed the short-term supply and demand structure, laying a solid bottom support for the rebound of the market.
Geopolitical Risks Tighten Import Supply
Geopolitical risks intensified, and there was a hard shortage in import supply. The shipping disruption in the Hormuz Strait continued in August, with weak operation of facilities in the Middle East region and blocked shipments, directly leading to a significant decline in the import volume of ethylene glycol into China. The continuous interruption of external supply replenishment sources further solidified the market's bullish trend.
Cost Centre Moves Higher Across the Chain
The cost centre of the entire industry chain systematically moved upward. In August, the upstream raw materials of ethylene glycol collectively strengthened, with monthly increases of over 10% in ethylene, coal, and methanol. The slight correction of naphtha slightly declined, only being a technical repair after the previous significant increase. The overall cost centre of chemical raw materials rose clearly, and the cost support for the production end of ethylene glycol continued to be consolidated, with the downward space being completely locked.
Demand: Stable Production, Rising Base
The demand side presented a structural feature of “stable production and rising base.” The average ethylene polyester production capacity in August remained at 77.59%, although it did not show an explosive rebound, but the continuous implementation of new capacity in the industry throughout the year led to the expansion of the industry capacity base, and the actual output did not weaken. The stable demand for necessities did not lead to a weak demand situation that could drag down the market. Under the combined logic, the supply and demand situation of ethylene glycol completely reversed in August, with a monthly supply-demand gap of over 500,000 tons, and the de-storage pace continued to accelerate. As of the end of August, the inventory at the main ports in the East China region dropped to around 160,000 tons, hitting a recent low, and the entire market officially entered a strong structure of low inventory, balanced supply, and easy to rise but difficult to fall.
September Acceleration and Strengthened Logic
Entering September, the bullish trend of ethylene glycol continued to accelerate, and the strong pattern was further played out. In the two trading days after the holiday, the main contract continuously rose and approached the limit-up mark, the spot basis significantly increased, quickly breaking above 1,000 yuan/ton, and the premium of the near-month spot continued to widen. The “spot is king” feature was extremely prominent, and the market trend entered the stage of acceleration, deepening, and exceeding expectations in September.
This September's strong continuation and upgrade were further strengthened, and the core logic was further reinforced, with the multiple supports being more robust and more sustainable than in August. First, the geopolitical deadlock has not been broken, and the shortage of imports is expected to persist throughout the middle and late stages of the third quarter. The shipping problem in the Hormuz Strait has not been resolved substantively, and the market's expectation of a reduction in import arrivals in September and even in the middle and upper reaches of October has further solidified. Secondly, costs have risen again, restricting the recovery of production profits, and the production capacity cannot rebound significantly. In September, the strong performance of crude oil has driven the prices of naphtha and ethylene to rise again, and the cost of ethylene from oil-based production has continued to increase; at the same time, the price of coal has steadily risen, and the production cost of ethylene from coal-based production has also been under pressure. Thirdly, the pace of inventory reduction continues and accelerates, and the tightness of spot supply exceeds that of August. In early September, the market inventory data continued to decline, and the inventory of the entire industry was at an absolute historical low. The spot inventories in upstream factories, ports, and downstream raw material reserve inventories all had no redundant buffers, and the available spot supply in the market remained scarce.
The Only Negative Factor Sits on the Demand Side
The only potential negative factor in the current market is concentrated in the demand side. The rapid increase in raw material prices has led to a significant increase in the production costs of polyester enterprises, and the terminal weaving and home textile sectors have difficulty quickly passing on the price increase. The terminal profits have been passively compressed, and there is a certain concern of demand suppression. However, overall, this negative impact is extremely limited and difficult to reverse the trend. The core contradiction in the current market is the rigid shortage of supply and the absolute low inventory, rather than the collapse of demand. Coupled with the strong certainty of demand in the traditional peak seasons of September and October, the low-level reserve and replenishment demand from the downstream side continue to exist, and the demand-side slight weakening cannot offset the strong positive factors from the supply side. The overall market presents a strong pattern dominated by positive factors and blunted negative factors.
Outlook: Super Bullish Trend to Continue
Based on the current supply and demand structure, cost logic, inventory cycle and market expectations, the strong market pattern of ethylene glycol in September will continue to deepen. Supply side: the import reduction pattern continues, the domestic production capacity recovery space is limited, and the overall supply increase is scarce. Cost side: crude oil, ethylene and coal have risen together, providing solid bottom support. Inventory side: the ultra-low inventory across the entire chain continues to be reduced, and the rigid premium of spot supply continues to strengthen. Demand side: the steady release of peak-season demand provides a bottoming-out effect for the market.
The market will continue to present a pattern of continuous inventory reduction, tight spot supply, strengthened basis, and strong near-month prices. There is still further room for the basis to widen, and the upward trend of the spot price has not ended. Before the supply gap is repaired, inventory has not accumulated, and the geopolitical risk has not been resolved, ethylene glycol as a whole is likely to rise rather than fall, the correction is extremely shallow, and the trend will continue. There is still sufficient upward space for the super bullish market in September.
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Disclaimer: This market analysis is published for industry reference only. It does not constitute a sales quotation or investment advice. Figures and views reflect the information available at the time of writing.
