In the latter part of the month, Diethylene Glycol (DEG) prices continued their upward trajectory in the European market. Specifically in Germany, DEG saw an increase of approximately 2% during this period. This rise in DEG prices was predominantly influenced by constrained supply and logistical disruptions. Recent heavy rainfall and flooding in the southern part of Germany further fuelled the upward trend in DEG prices. Reports indicate that the persistent heavy rain led to severe flooding across the region, causing disruptions in supply chains. Shipping lines and intermodal operators warned shippers about the impact of these disruptions on road and rail freight operations, exacerbating the supply limitations and driving prices higher. The flooding resulted in train cancellations, road closures, and stoppages, affecting both import and export operations via truck and rail.

Additionally, INEOS Group Limited, headquartered in Dormagen, initiated a reduction in its operational capacity at the beginning of the month, lowering it from 12,500 to 7,661 tons per month (TPM) for approximately 12 days for maintenance purposes. This reduction in capacity had an impact on DEG prices as inventory levels decreased amidst regular downstream consumption. Nevertheless, DEG demand in the downstream resin industry remained moderate, alongside active procurement. Furthermore, the price of the feedstock, Ethylene Oxide, declined due to the decrease in crude oil prices. Throughout this period, both DEG and the feedstock Ethylene Oxide experienced a drop of more than 3% in the region, attributable to the weakened upstream Ethylene market.

Observing an opposing trend, the DEG market in the US continued its decline during the latter part of May 2024, with prices dropping by approximately 5% in the domestic market. This decrease in US DEG prices can be mainly attributed to rising domestic inventory levels and a decrease in crude oil prices. According to the weekly EIA report, the price of West Texas Intermediate crude oil was recorded at USD 78.48 per barrel on May 24, 2024, reflecting a decrease of USD 3.18 compared to the previous week and an increase of USD 6.13 compared to the same period last year. Similarly, the spot price for conventional gasoline in New York Harbor also experienced a decline to USD 2.503 per gallon, down by USD 0.085 from the previous week and USD 0.212 from the previous year. Despite ample supply levels and a rapid increase in DEG production, there was an improvement in demand throughout the period. This prompted a positive response from downstream resin industries, fuelled by heightened procurement activities.

In conclusion, analysts predict that DEG prices are likely to follow a similar pattern in both regions in the upcoming weeks.