Ethylene glycol prices have surged over 200 yuan/ton since the May Day holiday, with the benchmark price hitting 5,055 yuan/ton as of May 13. For the textile industry, this signal extends beyond chemical price fluctuations—it reactivates the cost transmission mechanism in the polyester supply chain, squeezing margins for both polyester producers and weaving mills.
Import Disruption: A Structural Gap from Middle East Geopolitics
The core driver of this price rally is a sharp contraction in supply, specifically from import channel disruptions. China's ethylene glycol imports rely heavily on the Middle East, with Saudi Arabia alone accounting for over 55% of total imports. Currently, seven Saudi ethylene glycol units with a combined capacity of 4.17 million tons/year are shut down, and shipping through the Strait of Hormuz is blocked due to geopolitical tensions, effectively severing the import logistics chain.
April imports fell below 300,000 tons, a multi-year low. May arrivals are expected at only 54,600 tons, meaning the replenishment channel for port inventories is almost closed. For polyester plants, the loss of import supply forces greater reliance on domestic coal-to-ethylene glycol capacity, which cannot fully fill the gap in the short term due to coal costs and operating rates.
Port Inventory: What 738,000 Tons Means
East China's main ports serve as the hub for ethylene glycol spot trading, and their inventory levels directly reflect market tightness. As of May 8, port inventory dropped to 738,000 tons, a weekly decline of 110,000 tons, reaching multi-year lows. The destocking pace exceeded expectations, driven by persistently low import arrivals and stable downstream offtake.
During the May Day holiday, average daily shipments from East China ports rose 30%-47.54% week-on-week, indicating that polyester plants accelerated procurement in anticipation of tighter supply. The tight spot supply is reflected in the basis—East China polyester-grade ethylene glycol spot prices are 4,918-4,920 yuan/ton, at a significant premium to futures, a classic signal of supply strain.
For weaving mills, low ethylene glycol inventories mean polyester raw material costs are unlikely to fall in the near term. If port inventories cannot be effectively replenished by late May—given May arrivals of only 54,600 tons, this is highly improbable—ethylene glycol prices could break through 5,200 yuan/ton.
Downstream Transmission: The Rigid Support from 80% Polyester Operating Rates
Demand provides the key support for sustained price increases. Downstream polyester operating rates remain around 80%, generating stable rigid demand for ethylene glycol. While end-use weaving demand has shown minor fluctuations, no significant production cuts have occurred, meaning polyester plants will not suddenly slow their raw material procurement.
From a chain transmission perspective, rising ethylene glycol prices will first push up production costs for polyester chips and polyester filament yarn. Polyester plants face a dilemma: either pass costs downstream to weaving mills or compress their own margins. Given that the polyester sector is already operating at thin or negative margins, cost pass-through is almost inevitable.
For weaving mills, this means polyester filament yarn procurement costs will rise significantly in the next 1-2 months. If garment orders cannot adjust prices upward accordingly, weaving margins will be further compressed. Historical patterns show that when ethylene glycol prices stay above 5,000 yuan/ton for more than three weeks, polyester plants typically initiate a price hike cycle of 200-400 yuan/ton.
Outlook: Short-Term Strength Unlikely to Reverse
Given supply and demand factors, the short-term strong trend for ethylene glycol is unlikely to reverse. Key supply-side variables are the restart progress of Saudi units and the resumption of Strait of Hormuz shipping, but neither shows clear positive signals in the near term. On the inventory front, the low 738,000-ton level means even if arrivals recover, the destocking trend is hard to reverse immediately.
Costs also provide support. International crude oil prices remain elevated around $110/barrel, significantly raising the cost center for naphtha-based ethylene glycol production. While coal-to-ethylene glycol margins are acceptable, stable coal prices mean a solid cost floor for that route.
For textile industry participants, the focus should be not only on ethylene glycol prices but also on the cost transmission rhythm they signal. Procurement teams are advised to lock in some polyester raw material orders in advance to avoid chasing prices during rapid increases.