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On September 1, spot market liquidity tightened drastically; compounded by the ongoing US-Iran standoff and the lack of prospects for near-term import replenishment, the risk of a short squeeze at port terminals continued to rise, driving a strengthening trend fueled by the convergence of current market realities and future expectations. Mainstream spot prices in East China closed at 10,445 RMB/ton (up 45 RMB/ton), while South China spot prices closed at 10,030 RMB/ton (up 95 RMB/ton); the CFR China price held steady at 1,255 USD/tonne.
Supply side: Jiangsu Shenghong Petrochemical's 900,000-ton ethylene glycol/diethylene glycol (DEG) unit successfully restarted recently and is currently operating at 70–80% capacity. In the short term, a supply squeeze on Middle Eastern imports persists as the blockade in the region remains unresolved; however, supply is growing due to the restart of a Taiwanese unit in September, higher operating rates at domestic vegetation driven by improved margins, and the resumption of operations at other facilities. Statistics show that as of August 31, DEG port inventories in East China stood at 4,300 tons, an increase of 700 tons from the previous period. During the current period (September 1–7), there are no scheduled DEG arrivals at Zhangjiagang Port, as all domestic and deep-sea cargoes from the previous week have already been warehoused.
On the demand side, news of production cuts in the polyester sector has emerged; the complete operating rate to polyester dropped to around 78% in September, with the monthly average projected at approximately 77%. The overall operating rate to unsaturated polyester resin (UPR) stands at 30%, and market attention is focused on the extent of downstream restocking. Statistics indicate that as of August 27, the average weekly operating rate of domestic UPR vegetation was 33%. Regarding terminal shipments, the total volume from the Yangtze International and Vopak storage areas at major East China ports was 1,257 tonnes between August 24 and 30, averaging approximately 180 tonnes per day. On August 31, total shipments from the two Zhangjiagang storage areas amounted to 75 tonnes, a decrease of 105 tonnes compared to the previous week's daily average.
Cost side: Renewed low-intensity military conflict between the U.S. and Iran has heightened market concerns regarding supply risks; meanwhile, with no signs of the Strait of Hormuz fully reopening, these factors have provided upward support to oil prices, leading to a rise in international crude prices.
Market Outlook: In the short term, macroeconomic news remains evaporative, and import supplies are currently unavailable; consequently, significant accumulation of port inventories is unlikely in September, and risks to short positions persist amidst the delivery cycle. However, as domestic production units restart or ramp up operating rates, concerns regarding supply shortages are easing. Diethylene glycol (DEG) prices are expected to remain highly evaporative in September, warranting a cautious trading approach.
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