Diethylene Glycol Market Grapples with Oversupply and Subdued Demand Challenges

The Diethylene Glycol market is currently experiencing a decline in prices in the European and US markets, primarily due to an oversupply of the product and lackluster demand. This trend has persisted throughout October 2023, prompting Diethylene Glycol producers to consider consolidation in the industry. However, vessel delays have somewhat prevented sharp price decreases in the European market, while the outlook for the remainder of the year remains uncertain, with no significant peak in demand anticipated.

In October 2023, falling naphtha prices have alleviated pressure on the weak Diethylene Glycol market. Deep-sea availability of Diethylene Glycol was creating challenges for European traders, given the muted trade and limited discussions within the European Diethylene Glycol market during the same month. Negotiations for December 2023 spot prices were on hold as market participants awaited clarity on upstream market trends and deep-sea Diethylene Glycol availability. The decline in naphtha prices has improved the ethylene-naphtha spread, although it remains below breakeven levels, leading producers to exercise caution.

In the Asian market, most producers have maintained their operating rates unchanged in October, potentially exacerbating the oversupply of Diethylene Glycol in the region. The increased availability of deep-sea cargoes from the US may also exert pressure on Asian Diethylene Glycol producers. Downstream industries in Asia have been operating at reduced rates to manage inventory and costs, further adding to the challenges faced by Diethylene Glycol producers in the region.

Shell has announced a force majeure on glycol production at its refinery in Western Canada for the US market due to a lack of demand for downstream derivatives. This has had a direct impact on US Mono-Ethylene Glycol (MEG) prices, which have fallen due to soft demand and an oversupply situation. The weakening MEG prices have, in turn, exerted downward pressure on the Diethylene Glycol market since Diethylene Glycol is a byproduct in the synthesis of MEG. The decrease in exports can be attributed to the global decrease in demand, with US demand remaining lackluster, particularly as the year-end approaches.

According to the ChemAnalyst, the Diethylene Glycol market is expected to experience a marginal decline in the coming month of 2023 due to the surplus material availability. Moreover, the demand for antifreeze, a product relying on Diethylene Glycol, is not anticipated to strengthen significantly, primarily due to weaker-than-expected demand during the winter season. These challenges indicate a complexity in the Diethylene Glycol market, where oversupply and tepid demand continue to pose significant hurdles.