European TEG Prices Remain Steady in August 2024 as Downstream Demand Weakens

In August 2024, Triethylene Glycol (TEG) prices in the European market maintained a steady trend, fluctuating within a narrow range. This stability was largely attributed to weak demand from key downstream sectors. Despite a slight rise in the price of TEG's feedstock, Ethylene Oxide, which increased by approximately 2.2% due to rising Ethylene prices, the overall market remained under pressure. Global crude oil prices also exhibited a soft trend, contributing to the steady nature of TEG prices. According to the EIA report, West Texas Intermediate (WTI) crude oil stood at USD 78.05 per barrel on August 16, 2024, USD 0.23 lower than the previous week and USD 3.20 less than the same time last year. By August 23, 2024, WTI prices further dropped to USD 75.82 per barrel. Brent crude oil prices similarly weakened, declining by 0.3% during the last week of August and falling by 2.4% over the month.

The decline in TEG demand was driven primarily by subdued activity in its downstream applications. TEG, a key agent in natural gas processing, faced reduced consumption as European demand for natural gas weakened. EU gas demand in the first seven months of 2024 dropped by more than 3% year-on-year. The power generation sector, a major user of natural gas, experienced a downturn due to strong renewable energy output and increased nuclear generation. This reduced reliance on fossil fuel-based power, which in turn lowered TEG demand in the gas drying process. Additionally, the weaker demand for heating during the 2023/2024 winter, combined with industrial demand recovery, failed to significantly impact overall TEG consumption.

TEG demand in other downstream sectors, such as paints and coatings, also remained subdued in August. This was compounded by the downturn in the automotive industry, especially in Germany. New car registrations fell sharply, down 27.8% compared to August 2023, according to the Federal Motor Transport Authority (KBA). The electric vehicle sector saw an even steeper decline, with electric car registrations dropping by 69%. Diesel and gasoline-powered vehicle registrations also decreased, by 24.4% and 7.4% respectively. This significant reduction in automobile production and sales led to decreased demand for TEG in coatings and other related applications.

The overall downturn in these key downstream markets heavily impacted the European TEG market, with suppliers holding prices steady due to limited demand growth. Market players refrained from making any significant price adjustments throughout the month, as supply and demand dynamics remained balanced.

However, analysts anticipate that TEG prices may rise in the coming months. Higher feedstock prices, coupled with increased TEG consumption during the winter season, particularly for its use as an antifreeze agent, could exert upward pressure on prices moving forward.