In early June, Tri Ethylene Glycol (TEG) prices in Germany followed a downward trend, decreasing by over 1%, opposite to the previous month. The previous month had seen a notable 1.2% increase in TEG prices due to supply disruptions and inventory pressures. Throughout the month, TEG supply remained higher while demand decreased. While feedstock Ethylene Oxide prices significantly declined by 2.5%, influenced by weak crude oil prices. Despite challenges such as severe flooding and planned maintenance closures at INEOS Group Limited facilities in Cologne and Dormagen, TEG supply in Germany remained ample. Effective supply chain management ensured there were no significant shortages, as major storage facilities maintained optimal inventory levels to sustain consistent TEG supply to downstream industries.

However, TEG demand from the downstream automobile sector saw a noticeable decrease, largely due to reduced activity in the automotive manufacturing industry, which serves as its primary end-user. Data from the German Federal Motor Transport Authority in May 2024 indicated significant declines across various automotive indicators. New registrations for passenger cars totaled 236,425, marking a decrease of approximately 14.3% compared to the same period the previous year. Concurrently, domestic production of passenger cars experienced a substantial decline, dropping by 18% year-on-year to 307,500 units.

Similarly, TEG prices in the US market followed a downward trend, declining by around 2% in the first half of June 2024. The previous month had also seen TEG prices decrease by approximately 1.1%, attributed to reduced demand from downstream sectors. Concurrently, supply levels increased due to ample inventory and a stable price trend in feedstock Ethylene Oxide. Furthermore, during this period, there was a noticeable decrease in TEG demand from the downstream gas sector. Furthermore, a major contributing factor to the decline in TEG prices was the softness in the crude oil market. Data from the U.S. EIA for the last week of May showed that Brent crude futures decreased by 2.1%, closing at USD 81.86 per barrel, while U.S. West Texas Intermediate crude futures fell by USD 1.32, or 1.7%, to USD 77.91 per barrel.

However, spot rates for US container imports from North Asia and Southeast Asia hubs soared to their highest levels in almost two years, as diversions via the Red Sea worsened capacity challenges on East Asian shipping routes. By the end of May, shipping rates from East Asia to the West Coast of North America surged by 47%, while East Coast imports increased by 42%. Exporters faced a 110% increase in freight costs for shipments from the North American West Coast to East Asia, coupled with a roughly 15% decrease in costs for exports from the East Coast.

In conclusion, analysts predict that TEG prices are likely to follow the current trend in the European market, while they may see improvement in the US market in the upcoming months due to increased demand from international markets.