Global DEG Prices Continues to Rise Amidst the Struggle with Production Costs and Supply Issues

In March 2024, the US Diethylene Glycol (DEG) market continues its upward trend, following a period of price stabilization observed in the previous month. The temporary equilibrium witnessed earlier was attributed to weakening conditions in the Polyester resin sector and sluggish demand from downstream plasticizer segments, which exerted a pressure on DEG prices. However, March 2024 sees a resurgence in price, primarily driven by the increase in feedstock prices of DEG, particularly Ethylene Oxide (EO). The rise in EO prices, approximately of 1% towards the end of the second week of March 2024, became a significant factor behind the surge in DEG prices in the US market. Furthermore, the escalation of global crude oil prices, stemming from geopolitical tensions including the recent Ukrainian drone attack on Russian oil refineries, adds to the price pressure.

Meanwhile, in the German market, DEG prices continue their upward trajectory in mid-March 2024, echoing the trend observed in the US. The bullish trend observed in February, with DEG prices increasing by around 4% due to higher feedstock costs, persists into the current month. EO, a key feedstock for DEG, experienced a surge of approximately 0.7% during the second week of the month. Additionally, the German Chemical sector witnessed a modest uptick in performance in February 2024, driven by increased demand and stable energy prices. This trend indicates a potential improvement in factories and manufacturing activity during the month, further enhancing the price owing to downstream demand. However, challenges persist in the German market, with ongoing protests among transport drivers impacting supply chains and logistics. However, the Deutsche Bundesbank Eurosystem reported a rise in the German Consumer Price Index (CPI) from 126.4 in January 2024 to 127.2 in February 2024, highlight the inflationary pressures evident in the market, impacting consumers and manufacturers alike.

Similarly, the Chinese DEG market reflects the US and German trend of rising prices, driven by factors such as downstream demand and feedstock price fluctuations amidst a volatile crude oil price environment. However, feedstock, EO prices remained stable during the second week of March. Construction activity in China exhibited sluggishness compared to the previous month, as indicated by the National Bureau of Statistics, with business activity decreasing by 0.4% from the previous month.

In conclusion, analysts anticipate the global DEG market to maintain its upward trajectory in March 2024, amid a complex landscape shaped by geopolitical tensions leading to fluctuations in the global crude oil market. Specifically, the ongoing conflict between Russia and Ukraine, alongside the red sea crisis, stands out as major factors currently influencing global trade dynamics.