Diethylene Glycol Prices in China Climb 190 Percent Since March on Import Cutoff

China's diethylene glycol market extended its rally on 18 August 2026 as traders positioned for a month end squeeze at East China terminals. Mainstream spot prices in East China closed at 9,935 RMB per tonne, a gain of 190 RMB per tonne on the day, while South China settled at 9,880 RMB per tonne, up 215 RMB per tonne. Import parity quotes followed, with CFR China assessments closing at 1,075 US dollars per tonne, up 12 dollars. Measured against the 3,393 RMB per tonne benchmark recorded at the start of March, domestic prices have now risen by close to 190 percent in under six months.

Iran closed the Strait of Hormuz to foreign shipping on 28 February 2026 and the waterway has never reopened on a normal commercial basis. The Gulf ships roughly 6.5 million tonnes of monoethylene glycol a year, with diethylene glycol produced alongside it as a co-product, and China is the single largest buyer. When those cargoes stopped, Chinese processors lost their cheapest and most dependable source of supply.

The effect on prices was immediate. The SunSirs benchmark for diethylene glycol jumped from 3,393 RMB per tonne at the start of March to 7,000 RMB per tonne by the end of the month, a rise of 106 percent in four weeks that led the entire Chinese chemical sector. A 700,000 tonne per year integrated glycol plant in Fujian entered a 45 day maintenance shutdown on 5 March, and the national operating rate for diethylene glycol fell to around 42 percent, a three year low.

Prices then corrected. East China spot fell to 7,080 RMB per tonne on 21 April as downstream buyers resisted the new levels, and the market drifted to 6,690 RMB per tonne by 12 May while port inventories rebuilt to 21,100 tonnes. That rebuild has since been undone. Stocks were drawn down through the summer because replacement imports never materialised, and the market has climbed steadily since July.

Supply conditions tightened sharply again in August. Port inventories of diethylene glycol in East China stood at 5,100 tonnes on 17 August, down 2,050 tonnes from the previous reporting period and roughly 90 percent below the level recorded at the start of March. Only 1,000 tonnes of deep sea cargo were scheduled to reach Zhangjiagang Port during the week of 18 to 24 August. Very few additional vessels are booked before the end of the month, which is what has driven the current squeeze at the terminals.

Domestic plants offer only partial relief. Hengli Petrochemical has restarted its unit and has already fed feedstock into the system, and the Shenghong complex at Lianyungang in Jiangsu province is expected to come back online in late August. Both restarts add volume, but neither can replace the deep sea flow that used to arrive from the Gulf, and material leaving a plant takes time to reach the coastal tank farms where the shortage is actually being felt.

Demand has softened rather than collapsed. The average weekly operating rate at Chinese unsaturated resin plants stood at 32 percent as of 6 August, slightly below the previous period, as high feedstock costs squeezed margins. Polyester operating rates have held stable at a low level. Terminal movement confirms the caution. Combined shipments from the Yangtze International and Vopak storage areas at major East China ports totalled 2,919 tonnes between 10 and 16 August, an average of 417 tonnes a day. On 17 August the two Zhangjiagang storage areas shipped 330 tonnes, 87 tonnes below the previous week's daily average.

The memorandum of understanding signed by the United States and Iran in June expired on 17 August without being extended, leaving the two sides deadlocked over control of the Strait of Hormuz and over frozen Iranian assets. Iranian officials have restated that the waterway will stay closed until Washington lifts its naval blockade, releases frozen funds and eases sanctions. Washington has answered by tightening economic pressure rather than escalating militarily, and President Trump has warned Oman against interfering in efforts to reopen the strait. The United States Energy Information Administration expects Brent crude to average about 85 dollars a barrel through the third quarter of 2026, which keeps naphtha and ethylene costs elevated for every Chinese cracker.

The downstream exposure is wide. Diethylene glycol goes into unsaturated polyester resins used in construction panels, boat hulls and wind turbine blades, into polyurethanes, into plasticisers for paper and cork, and into antifreeze, printing inks and industrial solvents. Chinese resin makers have limited scope to pass on a near tripling of feedstock costs, and the same pressure is visible across the polyester chain, where China exported close to 15 million tonnes of product in 2025. Prolonged feedstock shortages cap export availability and erode margins across textiles, packaging and coatings.