Geopolitical Premium Fades, Ethylene Glycol Prices Rapidly Decline

May 8th News

In early May, the price of ethylene glycol in China was reduced.

In May 2026, the price of ethylene glycol decreased. According to the data, as of May 8, the average price of oil-based ethylene glycol in China was 5050 CNY/ton, a decrease of 2.04% from the average price of 5155 CNY/ton on April 30.

In terms of port ethylene glycol, as of the 8th, the basis quotes for spot contracts of port ethylene glycol (starting from 500 tons) fluctuated with the market. This week, the intra-day basis quotes for spot contracts operated within the range of +114 to +118. By the close, the basis quote for this week's contract (before May 8th) was +115 (actual Yanghong warehouse for dual warehouses); the basis quote for next week's contract was +120 to +125, and the basis quote for the late May contract was +135 to +140.

The price of spot coal-to-polyester grade ethylene glycol in China (bulk, tax included, self-pickup) for factory pickup is 4580-4630 CNY/ton.

In the external market for ethylene glycol, as of May 7, the negotiated transaction price for shipments arriving in China was around $620 per ton, while the negotiated transaction price for shipments arriving in Southeast Asia was around $720 per ton.

May 2026 Ethylene Glycol Port Inventory Changes:

On May 6, 2026, the total spot inventory of monoethylene glycol in the main ports of East China was 763,000 tons, a decrease of 190,000 tons from the total spot inventory of 953,000 tons on March 30, 2026, in the main ports of East China.

Analysis of the Reasons for the Decrease in Ethylene Glycol Prices in Early May 2026 in China:

In early May 2026, the price of ethylene glycol dropped rapidly. The core reasons were the dissipation of the geopolitical premium in the Middle East, the sharp decline in crude oil prices leading to a collapse in costs, coupled with weak demand for downstream polyester and a decline in the operating rate of the terminal textile industry, resulting in a high-level correction as funds exited en masse.

Core reason for the decline: Easing geopolitical tensions → sharp drop in crude oil prices → collapse of cost support.

From March to early May, the Middle East conflict (US-Iran, Strait of Hormuz) pushed up the geopolitical premium for crude oil and ethylene glycol, leading to a continuous rise in prices. On May 6, as the US and Iran neared an agreement on a memorandum of understanding, the expectation for the resumption of passage through the Strait of Hormuz led to a retreat in market panic. International crude oil prices plummeted, with Brent crude decreasing by more than 4% in a single day. The cost of oil-based ethylene glycol quickly fell, and the previously inflated geopolitical premium was squeezed out. The restart of Iran's 500,000 tons/year ethylene glycol plant, along with the expectation of improved overseas supply, further depressed prices.

Fundamentals are weak: Downstream demand in China is weak, and negative feedback is being transmitted upstream.

In the polyester sector, major filament producers have reduced production by 30% starting from April 20th, which will continue until the end of the second quarter. The operating rate of polyester is about 81%, but sales are sluggish and inventories are accumulating. In the terminal weaving sector, the operating rate has fallen below 50%, with insufficient domestic and foreign demand orders. Rigid demand procurement is the main focus, and there is a weak willingness to replenish inventory. High prices have suppressed stocking, as ethylene glycol previously rose to over 5000 CNY/ton. Downstream resistance to high prices and procurement based on demand have led to a lack of sustained demand to support price increases.

Fundamental Sentiment: Funds are concentrating on exiting the market, with futures driving spot prices lower.

In the earlier period, bullish positions were heavily crowded. From March to early May, funds were betting on the Middle East conflict and inventory destocking, leading to a concentration of long positions in futures contracts and driving prices to high levels. When news triggered a panic sell-off, following the easing of geopolitical tensions on May 6, short positions increased sharply while long positions were forced to cut losses and exit the market. As a result, futures volumes surged, and prices plunged, breaking through key support levels. The basis weakened: spot prices followed suit, with the basis narrowing from a premium of 130 CNY/ton to around 115 CNY/ton, thereby weakening spot price support.

Future Market Forecast

Currently, the price decline is driven by the fading of geopolitical premiums and the collapse of costs, coupled with weak demand and the withdrawal of funds from high positions, rather than a complete reversal of the supply and demand fundamentals. In the short term, prices will fluctuate with crude oil and geopolitical news, while in the medium term, they will still depend on the interplay between cost, the pace of supply recovery, and the strength of downstream demand recovery in China.

In the future, pay close attention to the recurring nature of the Middle East situation, including the progress of U.S.-Iran negotiations and the actual traffic conditions in the Strait of Hormuz, which will determine whether geopolitical premiums for crude oil and ethylene glycol continue to fluctuate. Also, monitor the trend in crude oil prices: given the high proportion of oil-based ethylene glycol production, fluctuations in crude oil prices will directly impact costs and price levels. Additionally, keep an eye on downstream polyester utilization rates and orders—the extent of production cuts and the depletion rate of finished textile inventories at the end-user level will determine whether demand can show marginal improvement. Finally, track port inventories and import arrivals: the volume of shipments arriving in mid-to-late May and the pace of inventory depletion will help assess whether the tight balance between supply and demand will persist.