MEG firms on lower supply, still pressured by polyester output cut – ChinaTexnet.com
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MEG firms on lower supply, still pressured by polyester output cut

2022-04-02 08:00:29 CCFGroup

Due to the strict pandemic prevention and control measures, MEG cargo offtake in port areas has slowed down. In the week of Mar 21-25, cargo discharges were delayed in Zhangjiagang with waterway closure, but MEG tank inventory in East China main ports stood above 960kt this Monday. The offtake in Zhangjiagang and truck transportation slowed down due to the strict pandemic prevention and cross-provincial highway control measures.

 

MEG supply-demand structure turns balanced in March after the inventory buildups in January-February, as producers cut operating rate due to persistent losses. The inventory remains high in East China ports, but inches down in polyester producers.

 

Purchases from polyester plants have slowed down due to the restrictions on the logistics. Meanwhile, as polyester sales remain subdued due to weak demand, polyester producers mainly took contract cargoes or consume their stocks rather than buying spot cargoes.

 

In addition, inventory in MEG producers has also decreased, particularly producers in South China. Since H2 Feb, some plants in South China shipped MEG cargoes to East China market. Those cargoes could be also reflected in the increase of port inventory. Meanwhile, the decrease is also because of unit turnarounds since late Mar.

 

Total MEG inventory will decrease in April-May, but the decrease would be mainly in polyester/MEG producers. The clear decrease in port inventory needs the improvement in logistics and cargo discharges.

 

MEG prices could increase on improving supply/demand structure and firmer costs. However, the upward room might be limited due to high inventory/consumption ratio and the polyester output reduction plans.

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