MEG port inventory in East China to gradually increase

MEG tank inventory in East China main ports decreased by 5kt week on week to 674kt on Jan 24. Tank inventory in Ningbo increased by 20kt to 52kt. Offtake volume in one major terminal of Ningbo was around 4,000 tons per day in Jan 17-23. Inventory in Shanghai&Changshu was 74kt, down 23kt; Zhangjiagang 340kt, up 22kt; Average daily offtake volume in one major terminal was around 9,500 tons by truck. Taicang 90kt, down 25kt. Average daily offtake volumes in two major terminals were about 7,000-7,500 tons; Jiangyin&Changzhou 118kt, up 1kt.

MEG port inventory hovered around 700kt/year in January. The offtake in ports was also better than the same period last year. The low level of polyester polymerization rate is estimated at 82-83% in the upcoming Chinese New Year holidays. The average level of Feb polyester polymerization rate is estimated at around 87%, which would be higher than in the previous years.

Given the active purchases prior Chinese New Year, MEG inventory in polyester plants also increased. Currently, port inventory remains stable but is expected to increase with more cargoes arriving and the end of pre-holiday purchases.

In addition, China domestic output is also recovery with the restarts of Sinopec Yangzi and Sinochem Quanzhou. ZPC and Fund Energy will also restart this week and are expected to get products within the week. Meanwhile, Weihe Binzhou Chemical and Jianyuan plan to restart in end Jan. If all the restarted units could ramp up operating rate smoothly, MEG plant operating rate could reach to around 70% in early Feb and coal-based operating rate could reach 57-58%. The offtake in port areas may also slow down with the recovery of China domestic output.