During the early weeks of September 2024, Diethylene Glycol (DEG) prices in the U.S. exhibited a relatively steady trend, with a modest week-on-week increase. This stability in DEG pricing was largely influenced by weak downstream demand, while the minor price rise was supported by feedstock costs. Ethylene Oxide (EO), a key feedstock for DEG, experienced a 1.3% price increase due to rising Ethylene prices and disruptions from hurricanes affecting multiple production sites.

Despite these supply challenges, global crude oil prices remained low. Oil prices reached their lowest point in 2024, driven by disappointing economic data from China and signs of a slowing U.S. economy. Additionally, the return of Libyan crude and potential additional supplies from OPEC, due to the unwinding of production cuts in October, contributed to the supply outlook. According to the Energy Information Administration (EIA), West Texas Intermediate (WTI) crude oil was priced at USD 68.58 per barrel on September 6, 2024, reflecting a USD 5.94 decrease from the previous week and USD 18.93 below the same period last year.

The demand for DEG in the U.S. remained subdued, particularly in the resin manufacturing sector, as downstream markets such as paints and coatings witnessed reduced activity. However, spot resin markets saw healthy trading during the Labor Day period, with steady demand for packaged truckloads. This pre-month-end push helped support DEG prices. On the demand side, DEG consumption from its major sector, paints, and coatings, stayed limited, exacerbated by downturns in the construction and automotive industries. Confidence in the U.S. construction sector weakened, as evidenced by a month-on-month drop in project backlogs and a decline in sales, profit margins, and staffing, as reported by the Associated Builders and Contractors (ABC) in August.

Supply of DEG was moderate, impacted by tight inventory levels, especially after several chemical plants in the U.S. began shutting down in response to Hurricane Francine. These shutdowns directly affected DEG production, further limiting supply. Nan Ya Plastics Corporation in Point Comfort, Texas, halted operations for the entire month due to the hurricane, while BASF paused operations in Geismar, North Geismar, and Vidalia, Louisiana. Louisiana, home to over 25% of U.S. ethylene production capacity, faced significant disruptions. Shell also halted oil and gas production in the Gulf of Mexico, although it continued operating its chemical production sites. The Bureau of Safety and Environmental Enforcement (BSEE) reported a shutdown of 38.56% of U.S. oil production and 48.77% of natural gas production in the Gulf of Mexico.

This tight supply situation, exacerbated by inventory constraints, led to a slight upward trend in DEG prices. As per ChemAnalyst, the DEG prices in the U.S. may increase further in the coming period, driven by supply shortages and an expected rebound in downstream demand.