DEG and TEG Prices Surge

09 August 2004 00:01  [Source: ICB Americas]

With the market for ethylene glycol (EG) continuing to strengthen, its co-products diethylene glycol (DEG) and triethylene glycol (TEG) have become significantly tighter as well. In fact, DEG prices have surpassed EG prices in some cases, while TEG prices are expected to rise throughout the remainder of 2004.

Recently, DEG prices in China soared above $1,000 per ton and are rumored to be as high as $1,030 per ton. Ethylene glycol prices are currently just under $1,000 per ton. In the US, DEG prices are in the 44 to 46 cent per pound range.

Firm demand and a tight supply situation are driving the run up in DEG prices. “China is growing demand at 60,000 tons per year,” notes Doug Rightler, director of Guildford, UK-based PCI Xylenes and Polyester Ltd. “China blew past the US as the largest DEG consumer in the world. Growth is 20 percent per year. They have increased their DEG consumption by 55,000 to 60,000 tons per year, every year for the past four years. That’s at least a 220,000 ton increase.”

Demand is also strong outside of Asia. “DEG demand outpaces supply in all areas of the globe, particularly in Europe,” notes John O. Smith, commercial manager and North American marketing manager for ethylene oxide and higher glycols for Dow Chemical Company. “Domestic demand for DEG is strong,” adds Jim Bryan, president of Old World Industries Inc.

“DEG was tight to begin with and some companies went into turnaround and have been unable to catch up in terms of delivering DEG,” notes George West, director of Houston-based Chemical Intelligence.

While TEG is not as tight as DEG, its business has improved throughout 2004. “The real one to watch is the smaller volume TEG, which could get real tight this season because a lot of people have cut back on on-purpose TEG production,” says Mr. West. “TEG is going to go through the roof,” adds Mr. Rightler. “Natural by-product production of TEG is not sufficient to meet demand.”

Several producers make TEG on purpose by adding ethylene oxide to DEG, according to Mr. Rightler. Because of the high price of DEG, “TEG is not worth making for less than 50 cents per pound,” he says.

“For TEG and Tetra [ethylene glycol], supply and demand are fairly balanced,” notes Dow’s Mr. Smith. Many sources report that producers are attempting to push their production more towards DEG, where supply is in critical need versus the higher glycols. “TEG is getting to where it should be,” says Mr. Bryan.

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