MEG port inventory stands above 1.2 million tons

MEG prices fluctuated widely in the second half of May. The continuous buying was inactive as traders sold during the price increase. MEG inventory stood above 1.2 million tons Monday and the spot availability was still ample.

MEG cargo arrivals decreased recently, however, the offtake remained weak. In the week of May 16-20, the offtake volume in Zhangjiagang was only around 3,000 tons per day, which was the lowest level in the recent years.

Polyester polymerization rate remains around 81-82% recently with limited recovery. Polyester plants mainly took contract goods rather than buying spot MEG. Meanwhile, with improving logistics since mid-May, the site-to-site transportation of China-made MEG, including coal-based MEG, was smooth. The preference for China-made MEG also led to the slow decrease in port inventory.

In polyester industrial chain, demand for FPY weakened due to weakening twisting, weakening and dyeing sectors in the recent two weeks. Meanwhile, end-users were cautious to stock up on rising PFY price and insufficient orders. The consumptions for polyester product inventories were also slow.

MEG supply has gradually decreased and the market would be broadly balance in May-June or slightly oversupplied. However, the market still lacks upward momentum due to high inventory level. In addition, remaining tank capacities in East China ports are getting tight. The congestion will show again if the offtake could not effectively improve.