SINGAPORE (ICIS)--China’s domestic diethylene glycol (DEG) prices are likely to come under pressure during the second half of February due to weakened downstream demand and a pileup in port inventories.
On 11 February, DEG prices were assessed at yuan (CNY) 6,470-6,500/tonne ex-tank in east China, down by CNY560-550/tonne from early January, according to ICIS data.
Demand from the unsaturated polyester resins (UPRs) industry, which consumes over 50% of DEG in China, has tapered ahead of a week-long holiday.
All UPR plants in south and north China had halted production by end-January, while those in east China had been taken off line by early February.
China will celebrate its Lunar New Year on 15-21 February.
Most traders will soon retreat from the market in the run-up to the holiday.
Meanwhile, a concentration of shipments, carrying nearly 20,000 tonnes of cargoes, are expected to arrive in east China in the near term after disruptions caused by inclement weather earlier in the month.
As of 9 February, DEG inventories at major ports in Jiangsu province stood at 55,000 tonnes, according to data compiled by ICIS.
Market sources said that port inventories in east China may rise to 65,000 tonnes ahead of the Lunar New Year holiday, pile up to 75,000 tonnes after the holiday, and reach around 90,000 tonnes by the end of March, as downstream demand is likely to remain tepid during the period.
Downstream UPR market is likely to extend its sluggishness until April, an UPR producer said.
However, DEG prices may find some support from its robust co-product monoethylene glycol (MEG).
Interactive by Tahir Ikram and Nurluqman Suratman
Focus article by Cindy Qiu