MEG transport-difficulty of in-and-out of port areas

The epidemic situation in Shanghai is still continuing and the spillover is gradually increasing, and local control measures have been upgraded. Since the beginning of the week, static management has been implemented in some areas of Taicang, and some areas of Zhangjiagang upgraded synchronously, stopping the unnecessary movement of personnel. As the main port area of ethylene glycol, static management has a significant impact on offtake. Some polyester factories said they were ready to suspend taking cargoes within 2-3 days, and some factories said that they would really cut off raw materials if the logistics could not improve.

Since the beginning of April, the traffic conditions in various places have been strict, and the overall logistics efficiency has dropped obviously. Due the blocked offtake, MEG inventory in main port area of East China has risen to around 1.08-1.09 million tons this week. Since mid-Apr, MEG cargo arrivals at the main port were concentrated, mainly the stranded cargo in late Mar and intensive arrival of deep-sea cargo in mid-Apr. 

In short term, MEG port inventory still has room to rise, but there are other reactions after the implementation of strict controls. Previously people were talking about that Taicang terminal has annouced that their pilot on the road has been physically isolated, can not go to the wharf, can only stop work. According to CCF follow-up, the pilot station is currently actively coordinating, there is no public announcement of "unable to dock" news. 

At the same time, due to the influence of strong winds, the closure of Yangtze River Estuary occurs occasionally. The overall discharge progress is slow, and the port detention problem is still intensifying. The dilemma of entering and leaving the port still exists. On the one hand, the importer said that the ship that had waited for 20 days was still waiting at the Yangtze River Estuary; on the other hand, the polyester factory had difficulty in picking up the goods and was even forced to shut units. For MEG, high level of port inventory continues weighing on the market, but spot/futures spread firms as the import cargo replenishment is slow. 

Coal-based MEG supply has been also affected by the restricted logistics. Besides HNEC Yongcheng, Anhui and Shandong, the transportation is mainly by truck. MEG transport for some polyester plants have been affected.

Polyester polymerization rate is expected to fall to around 81-82%. The blocked feedstock supply may exacerbate polyester output reduction. In short term, MEG demand will keep weak.