Monoethylene glycol and Thermal coal

About two fifths of China's glycol capacity now runs on coal-based syngas rather than ethylene, so Chinese coal costs help set the floor for Asian MEG prices that Indian polyester makers pay.

Monoethylene glycol (chemical) and Thermal coal (energy): 4 relationships.

How they are linked

1. Coal syngas route

Physical flow · Medium · Thermal coal to MEG

MEG is normally made from ethylene oxide, but China has built plants that gasify coal into syngas and convert it to glycol, so coal can replace ethylene as the starting material.

• 11.97 Mt China coal-to-glycol capacity (reported 2025)
• about 40% coal-based share of China's 31.5 Mt glycol capacity, end 2025

Coal-to-glycol is almost entirely a Chinese route, built where coal is cheap and ethylene is scarce. In 2019 coal-based routes gave about 34% of China's glycol output (ICIS), and by the end of 2025 they held about 40% of capacity.

Sources: ICIS; Deep News, via Tiger Brokers; Bloomin Global

2. Coal route versus ethylene route

Substitution · Medium · Coal-based MEG competes with ethylene-based

The two routes make the same product, so their relative cost depends on coal versus oil and ethane prices: cheap coal favours the syngas plants, cheap ethylene favours conventional ones.

• about 3,675 yuan/t coal-based glycol cost, Ordos coal at 525 yuan/t (January 2026)
• about 4,230 yuan/t ethylene-based glycol cost at the same date
• 58% vs 64% average 2025 operating rates, coal-based versus ethylene-based plants

In January 2026 the coal route was about 13% cheaper on paper, yet coal plants ran at lower average rates than ethylene plants through 2025. The advantage can reverse: in 2020, when oil and ethylene fell, ICIS judged Chinese coal-based glycol to be losing competitiveness because its costs barely moved.

Sources: ICIS; Deep News, via Tiger Brokers

3. Price link: alternative route

Cost and price · Medium · Both ways

With about two fifths of Chinese capacity on coal, the coal-route cost acts as a reference floor for Asian glycol: when prices fall towards it, coal plants cut runs.

• 0.17 monthly change correlation
• 0.76 12-month change correlation
• 2 months lag at which the link is strongest

Monthly moves barely correlate (0.17) but yearly moves do (0.76), with a lag of about two months, and the fitted elasticity is low (0.28). Read this as a shared energy cycle plus a cost floor, not a direct feedstock pass-through, because ethylene still accounts for about 60% of China's glycol capacity and nearly all capacity elsewhere.

Sources: Deep News, via Tiger Brokers; Material Insights (World Bank, FRED, IMF data)

4. Coal chemicals and carbon rules

Policy · Rising · Climate policy weighs on coal glycol

Coal-to-chemicals is carbon intensive, and China plans to bring the sector into its emissions trading scheme, which would raise the cost of the coal route relative to ethylene.

Any carbon cost on coal-based glycol narrows its cost advantage, which is already offset by lower operating rates. Indian buyers face trade measures on top: in September 2025 DGTR recommended anti-dumping duties of USD 102 to 173 a tonne on glycol from the Gulf and Singapore, which polyester makers opposed; the final decision rested with the Ministry of Finance.

Sources: Bloomin Global; Fibre2Fashion; Fibre2Fashion

For investors

Key learnings

1. Chinese coal-to-glycol capacity, about 40% of China's total, links Asian MEG prices to Chinese coal, not only to oil and ethane.
2. The coal route's cost edge swings with oil: it is wide when crude is high and can vanish when ethylene is cheap, as in 2020.
3. Coal-based plants run below ethylene-based ones even when cheaper, so capacity figures overstate how much coal-based glycol actually reaches the market.

What to track

• China thermal coal price (Ordos, Qinhuangdao): Cheaper coal lowers the cost floor of Chinese glycol (Daily · Chinese exchanges and coal associations)
• MEG CFR China and CFR India: Prices near coal-route cost signal oversupply (Weekly · ICIS, Argus)
• China glycol operating rates by route: Rising coal-route rates mean more competition for Gulf exporters (Weekly · Chinese industry data (CCF, SunSirs))

For policymakers

Key learnings

1. India's polyester chain buys glycol on an Asian market whose cost floor is partly set by Chinese coal plants, so Chinese coal and carbon policy matter to Indian textile costs.
2. DGTR's September 2025 recommendation of USD 102 to 173 a tonne on Gulf and Singapore glycol, opposed by polyester makers, shows the tension between the two domestic producers, Reliance and Indian Oil, and downstream users; the decision rested with the Ministry of Finance.
3. Coal-based glycol is carbon intensive, so Indian polyester exporters whose buyers ask for product carbon footprints may need to know whether their glycol came from coal.

What to track

• India MEG imports by origin: A shift towards Chinese supply would expose India more directly to coal-based glycol (Monthly · DGCIS)
• Anti-dumping actions on MEG (DGTR, Ministry of Finance): Duties raise input costs for polyester makers and protect domestic producers (As notified · DGTR)

India

India's main glycol producers are Reliance and Indian Oil, and it imports much of the rest from the Gulf and Singapore; DGTR recommended anti-dumping duties of USD 102 to 173 a tonne on those imports in September 2025, leaving the decision to the Ministry of Finance.

Sources

1. ICIS webinar: Chinese coal-based PVC, MEG losing competitiveness to ethylene-based routes, ICIS (2020)
2. Breaking the cost barrier in syngas-based ethylene glycol production: the primacy of resources, Deep News, via Tiger Brokers (2026)
3. China's coal chemical industry enters new phase of low-carbon transformation and strategic reshaping, Bloomin Global (2025)
4. India approaches deadline on proposed MEG anti-dumping duty, Fibre2Fashion (2025)
5. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
6. Indian textile industry opposes proposed anti-dumping duty on MEG, Fibre2Fashion (2025)