Supply Deficit of Diethylene Glycol

The output of diethylene glycol as a byproduct of the mono
ethylene glycol (MEG) production through ethylene oxide
hydration is around 8%-9% of the MEG output. China has 12 MEG
producers today. All these producers use the ethylene oxide
direct oxidation process. The output was around 1.436 million
tons in 2006. With the completion of the 380 thousand t/a MEG
unit in Sinopec Shanghai Petrochemical Company Ltd. in 2007,
(CCR2007, No. 8) China's production capacity of MEG has reached
around 2.01 million t/a.
   The output of diethylene glycol in China was around 120
thousand tons in 2006. Of the total, the output in Sinopec Group
and CNPC was 105 thousand tons and the output in CNOOC and Shell
Petrochemicals Company Ltd. was around 15 thousand tons. The
imported amount was 337 thousand tons, the apparent consumption
was 455 thousand tons and the import dependence was as high as
74.1%.
   As the output of MEG can not meet the downstream demand, quite
a few companies have planned to construct or expand MEG units.
It is expected that the total capacity of MEG in China will reach
around 4.3 million t/a in 2010. Based on an operating rate of
90%, the output of diethylene glycol in China will reach around
329 thousand tons in 2010.
   Due to the market supply deficit and the oil price rise, the
price of diethylene glycol rose constantly in 2006. The monthly
average price in Shanghai market increased from RMB7 337 per ton
in January to RMB10 881 per ton in December. The yearly average
price in 2006 reached RMB8 675 per ton, an increase of 0.8% over
2005.
   The price of crude oil will drop in 2007. The price of over
US$60 per barrel in the futures market will not stay long. The
production cost of diethylene glycol will hopefully go down. In
addition, the price of MEG is much lower than that of diethylene
glycol. In both the UPR (unsaturated polyester resin) production
and the antifreeze fluid production MEG will partially replace
diethylene glycol. The overall demand of diethylene glycol will
decrease. The price of diethylene glycol will therefore drop in
2007.