Coal-based MEG regains profits on price hike
MEG futures EG2105 contract broke 5,900yuan/mt and spot price stood around 6,400yuan/mt, leaving spot/futures spread at quite high level. With the rapid increase in MEG price, coal-based MEG cash flow also improved.
After the China market returned from Chinese New Year holidays on February 18, coal chemical producers were active to run at high rate. Coal-based MEG cash flow improved despite rising coal prices. For a 200kt/year unit, the cash flow would reach around 1,700-1,750yuan/mt recently. (The cost here includes freight rate and discount, excludes depreciation and financial expenses.)
Inner Mongolia Tongliao GEM Chemical shut its 300kt/year coal-based MEG unit on February 26 for around one week maintenance. Xinhang Energy has restarted its 100kt/year line of its 400kt/year coal-based unit days earlier than original plan. Operating rate of coal-based MEG units was around 64.9% on Feb 25, up 6.1% from the pre-holiday level of 58.8%.
Despite the better profits this year, the overall operating rate was still lower than in the same period last year. The high level of coal-based MEG units was around 87% in January 2020. According to maintenance/restart recently, the increase in operating rate of coal-based MEG units would be limited in March. The maintenance plan of Qianxi Coal Chemical was still pending. The high rate in March would be around 71% as Qianxi postponed its maintenance considering rising MEG prices.
Company | Capacity | Location | Maintenance plan |
Tongliao GEM | 300 | Inner Mongolia | Feb 26-Mar 4 |
Xinhang Energy | 400 | Inner Mongolia | restarted 100kta on Feb 26 |
Yangmei Pingding | 200 | Shanxi | to restart in H2 Mar |
Woneng Chemical | 300 | Shanxi | end Mar, 7-10 days |
Qianxi Coal Chemical | 300 | Guizhou | Mar, pending |
Among the closed units, Yangmei Pingding is likely to restart in the second half of March and HNEC Xinxiang may also restart within March.
Company | Capacity | Location | Restart plan |
HNEC Anyang | 200 | Henan | SD Mar 3, 2020; gasifier tech upgrading, won't restart in short term |
HNEC Xinxiang | 200 | Henan | SD Dec 30, 2020; has restart plan, waiting for HNEC approval |
Hubei Chemical Fertilizer | 200 | Hubei | SD Feb 29, 2020; upgrading, to complete in mid-2021 |
Yangmei Pingding | 200 | Shanxi | SD Mar 28, 2020; expected to restart in H2 Mar 2021 |
Yangmei Shenzhou | 200 | Hebei | SD May 2, 2020; upgrading, no restart timing |
Tianye | 300 | Xingjiang | SD May 14, 2020; may not restart within Mar |
In terms of new capacity, capacity is expected to increase by 1.24 million mt/year in H1 2021 and around 3.4 million mt/year in H2 2021. Shaanxi Weihe Binzhou Coal Chemical has achieved on-specification polyester graded products at its 300kt/year syngas-based MEG unit recently. For large capacities, Hubei Sanning is expected to supply the market in end April or early May. Yulin Chemical has three 600kt/year lines, and is expected start one by one starting from August.
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