Market Intelligence Report on Polyester-Grade Ethylene Glycol (EG) – Recent Commodity Market Dynamics

I. Price Trends
- Spot Prices: As of May 22, 2026, the domestic oil-based ethylene glycol (EG) market average price stood at RMB 4,903.33/ton, down 4.88% from RMB 5,155/ton on April 30. The spot price for domestic coal-based polyester-grade EG (loose, tax-inclusive, ex-works) ranged between RMB 4,350–4,450/ton. Shanxi Lu’an Chemical Technology Co., Ltd. Sales Branch conducted an auction on May 25, 2026, offering 200 tons of polyester-grade EG with a starting bid of RMB 4,100/ton (tax-inclusive, ex-works), representing a RMB 300/ton reduction from the previous day’s starting bid.
- Futures Prices: On May 22, 2026, the Dalian Commodity Exchange (DCE) EG main futures contract (2609) closed at RMB 4,550/ton, down RMB 114/ton from the prior trading day. Both trading volume and open interest increased, indicating short-term bearish sentiment and mounting downward price pressure.

II. Supply-Demand Fundamentals
- Supply Side:
- Domestic Supply: Coal-based EG plant operating rates remain high, with facilities such as Yulin Chemical and Qianxi Coal Chemical running at full capacity, continuously ramping up supply. As of May 21, total EG inventory at major East China ports reached 683,000 tons—up by 5,000 tons week-on-week (vs. May 18) but down by 89,400 tons month-on-month (vs. April 30) and by 270,000 tons quarter-on-quarter (vs. March 30). Although port inventories continue to decline, they remain at a medium level relative to recent years.
- Imports: Multiple Middle Eastern EG plants are undergoing maintenance, leading to reduced import volumes expected in May–June. However, the impact on actual arrivals has yet to fully materialize; market pricing has already partially reflected this anticipated import reduction, failing to generate an immediate supply deficit.
- Demand Side:
- Polyester Production: In May, the average operating rate of domestic polyester plants was only 75%–77%, down 3–5 percentage points year-on-year, resulting in markedly weaker base demand for EG.
- Downstream Weaving: Jiangsu-Zhejiang weaving machine operating rates stood at just 66%, with orders predominantly small-batch and fast-response orders. End-user inventories remain elevated, prompting polyester plants to proactively reduce output—triggering a negative feedback loop: weak demand → production cuts → lower procurement → falling prices.

III. Cost Drivers
- Crude Oil Prices: In the early hours of May 22, 2026, media reported that the U.S. and Iran had reached agreement on the final draft of a deal mediated by Pakistan. Markets instantly priced in “de-escalation of Middle Eastern geopolitical risk + re-entry of Iranian crude oil into global supply,” causing Brent crude to plunge over 6% intraday from ~USD 109/bbl, while WTI crude fell below USD 100/bbl. This sharp correction directly eroded cost support for EG.
- Coal-Based Production Costs: Domestic thermal coal prices have remained stable with slight softness; coal-based EG profitability has improved, sustaining operating rates above 60%.

IV. Market Sentiment & Capital Flows
- Market Sentiment: Weak downstream demand and weakening cost support have further deteriorated expectations for the traditional off-season (June–July), prompting most traders and downstream fabricators to adopt a wait-and-see stance and refrain from proactive buying.
- Capital Flows: From March to April, the EG main futures contract accumulated substantial unrealized gains amid Middle Eastern geopolitical tensions. Starting in May, as de-escalation expectations strengthened, capital began systematically locking in profits. On May 22, the main contract broke below the critical technical support level of RMB 4,600/ton, triggering a wave of algorithmic stop-loss orders, intensifying short selling and amplifying the intraday decline.

Analysis & Assessment
- Short-Term Weakness Likely to Persist: U.S.–Iran détente has depressed crude oil prices, weakening cost support; weak demand during the seasonal lull, coupled with still-elevated port inventories (despite ongoing drawdowns), suggests EG prices will remain under downward pressure in the near term.
- Widening Supply-Demand Imbalance: Sustained high output from domestic coal-based EG facilities is exacerbating oversupply, while declining polyester operating rates and shrinking base demand intensify downward price pressure.
- Pessimistic Market Sentiment: Market expectations have turned increasingly bearish; buyers remain hesitant and passive, leaving prices without meaningful support or upside catalysts.

Outlook
- Price Trend: EG prices are expected to continue trending downward in the near term; close attention should be paid to crude oil volatility and changes in downstream order flow. Should crude oil prices remain persistently low, EG’s cost floor will weaken further, potentially pushing prices toward new lows.
- Supply-Demand Landscape: With additional domestic coal-based EG projects coming online sequentially, supply will keep expanding, whereas the pace of recovery in polyester demand remains sluggish—insufficient to absorb the surge in new capacity—further worsening the supply-demand imbalance.
- Market Opportunities: Amid the prevailing price weakness, investors may monitor cost dynamics and structural shifts in supply-demand for potential short-term rebound opportunities—but must exercise caution, strictly manage position sizing, and prioritize risk control.