MEG storage tanks nearly full amid weak demand

MEG tank inventory in East China main ports increased by 86kt week on week to 1,173kt on Apr 25. Tank inventory in Ningbo decreased by 2kt to 130kt. Offtake volume in one major terminal of Ningbo was around 2,000 tons per day in Apr 18-24. Inventory in Shanghai&Changshu was 95kt, up 3kt; Zhangjiagang 629kt, up 28kt; Average daily offtake volume in one major terminal was around 4,500 tons by truck. Taicang 191kt, up 45kt. Average daily offtake volumes in two major terminals were about 5,500 tons; Jiangyin&Changzhou 128kt, up 12kt.

The recovery in logistics and polyester demand remains slow due to the Covid-19 spread. Coupled with MEG cargo discharges from large vessels, MEG inventory in Zhangjiagang increased apparently. Due to low polyester polymerization rate and restricted logistics, polyester producers were inactive to take back cargoes back to plants. As a result, the remaining MEG tank space is getting tight. Commercial tanks in Ningbo are nearly full and the remaining tank capacities in Taicang and Zhangjiagang are only around 10-20%. However, there are still lots of floating cargoes waiting for discharging in Yangtze River Estuary. MEG inventory in East China main ports will remain high.

Tanks are also available in some other ports. However, considering the liquidity and discount/premium situations, cargo holders were inactive to turn to other port tanks.

For the second quarter of 2022, the surplus for MEG supply is estimated at 200-250kt with inventory level remaining high. MEG prices will be still weighed by the weakness in fundamentals. The restoration of MEG supply-demand balance needs further output reduction.