Tight supply in early May to keep East China’s DEG prices high

04 May 2012 06:25  [Source: ICIS news]

SINGAPORE (ICIS)--East China’s domestic diethylene glycol (DEG) prices are expected to stay high at their current levels as spot availability remains tight in the first half of May, industry sources said late on Thursday.

East China’s DEG prices increased by 13.8% in the past three weeks, rebounding from 11 April to CNY6,600/tonne ($1,048/tonne) ex-tank on 3 May, according to Chemease, an ICIS Service in China.

The DEG prices had fallen to CNY5,800/tonne ex-tank on 11 April from CNY7,100/tonne ex-tank on 1 January.

East China’s DEG prices may continue increasing as spot cargoes are still in tight supply in the short term and downstream demand improves, according to a trader.

The spot availability in Jiangsu province, the main DEG market in east China, has been tight recently as some cargoes could not be discharged on schedule because of a lack of warehouse space, said market players.

In addition, some sellers of future cargoes are replenishing their stock, further tightening supply, they added

It is currently the peak demand season for downstream sectors, such as the unsaturated polyester resin (UPR) and polyurethane (PU) sectors, and producers are increasing the demand for DEG as they raise operating rates at their plants, the producers said.

However, DEG inventory level in Jiangsu, which is around 130,000 tonnes, is still considered high, compared with the regular level of about 60,000 tonnes and most traders said they are pessimistic about the outlook for the east China DEG market in the longer term.

($1 = CNY 6.30)

By: Lizzie Wang

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