Ethylene Glycol Prices Hit Three-Year High as China Port Stocks Fall to Decade Low

Ethylene glycol prices at the main ports of East China reached their highest level in nearly three years on 3 September 2026. The spot benchmark for imported polyester-grade material was assessed at 6,876 yuan per ton, against a January average of 3,718 yuan per ton. That is a gain of close to 85 percent since the start of the year, and it has turned a market that spent most of 2025 in oversupply into one of the tightest chemical markets in Asia.

Ethylene glycol is one of the two main building blocks of polyester, alongside purified terephthalic acid. It goes into polyester fibre for clothing and home textiles, into PET resin for drinks bottles and food packaging, and into antifreeze and engine coolant for vehicles. Because it sits so early in those chains, a sustained shortage does not stay inside the chemical industry. It reaches textile mills, packaging converters and automotive suppliers within a few weeks.

Most of the world's supply starts from ethylene, which is produced by cracking naphtha or ethane. The ethylene is turned into ethylene oxide, and the oxide is then reacted with water to form ethylene glycol. China also runs a large fleet of coal-based plants that build the same molecule from synthesis gas rather than from oil products. Trouble far upstream in crude oil, natural gas and tanker traffic shows up in glycol prices very quickly.

The upstream trigger this year has been the Strait of Hormuz. Hostilities intensified from 31 August, when two supertankers loaded with Saudi crude were struck by projectiles while transiting. US Central Command answered on 1 September with a coordinated wave of strikes on Iranian military positions, radar sites and mine-laying assets. In the 24 hour window that ran from 18:00 on 2 September to 18:00 on 3 September, only three vessels crossed the chokepoint. Before the conflict the daily figure was around 138.

That matters for glycol because of where China buys. Chinese import dependence on ethylene glycol has long sat in the 50 to 60 percent range, and roughly 65 percent of imported volume comes from the Middle East. Saudi Arabia alone accounts for about 55 percent of that Middle East total. Cargoes from Saudi Arabia, Iran and Oman all have to pass through the strait. With transits reduced to a handful per day, the physical link between Gulf plants and Chinese ports is largely broken.

The import numbers show the damage. In normal years China took in about 600,000 tons of ethylene glycol per month. Arrivals collapsed to 120,000 tons in June 2026, August volumes are expected to come in below 200,000 tons, and September arrivals are set to stay at a similarly low level. Buyers who would normally cover a gap with a prompt cargo simply cannot find one.

Inventories absorbed the shortfall until they ran out. Stocks at the main ports of East China stood at 970,000 tons at the annual peak in early March. By 31 August they had fallen to 143,000 tons, a ten-year low and a drawdown of more than 85 percent. At that level the market has almost no buffer left, and even a small supply hiccup now produces a sharp price move.

Domestic production has not filled the hole. August brought a concentrated maintenance window in which several coal-based Chinese plants shut down, taking more than 3.5 million tons of annual capacity offline for the month. Some oil-based units have restarted since, but they are ramping up slowly. Crude-based producers have also struggled to run at optimal rates because their own feedstock supply is constrained, while coal-based units have been running at full capacity on strong margins.

Demand is strong. September and October are the traditional peak season for Chinese polyester, when textile and weaving companies stock up ahead of autumn and winter orders. Downstream buyers are trying to build coverage into that season at exactly the moment when there is nothing on the water. Some polyester and PET producers have already cut run rates or idled units rather than pay current raw material costs, which is an unusual response during what is normally the busiest quarter of the year.

The futures market has registered the shift clearly. At the start of the year, spot material traded at a discount of 120 to 160 yuan per ton against the main contract. It now trades at a premium of more than 1,000 yuan per ton. A move of that size in the basis is a direct signal that physical availability, not sentiment, is driving the market.

Broader petrochemical conditions have added cost pressure on top of the shortage. Brent crude climbed above 90 dollars per barrel on 25 August before easing back to around 87 dollars, and the US Energy Information Administration expects Brent to average roughly 85 dollars per barrel across the third quarter. Ethylene prices in Asia rose in the week ending 21 August, supported by demand from ethylene oxide, glycols and polyethylene. Ethylene glycol itself gained close to 8 percent that same week.

The squeeze has not hit all producers equally. The Chinese ethylene glycol industry is fragmented, but the large integrated refining and petrochemical groups have concentrated capacity and cost advantages. Rongsheng Petrochemical leads the private sector with 2.4 million tons per year of capacity, supported by the Zhejiang Petrochemical complex and its 4.2 million tons per year of ethylene processing. A high level of ethylene self-sufficiency means the group can capture the price spread on merchant sales while also feeding its own polyester operations, which smooths earnings in both directions of the cycle. Single-product producers without that integration have far less protection.

Nothing in the current picture points to a fast resolution, because the constraint is a shipping lane rather than a plant. Analysts tracking the market are watching four things: the security situation in the Middle East, transit volumes through the Strait of Hormuz, the pace of cargo arrivals at Chinese ports, and how quickly domestic units complete their restarts.