MEG prices continues going down

MEG futures in Dalian Commodity Exchange continued going down Tuesday. In spot market, domestic MEG decreased by around 150yuan/mt to 4,827yuan/mt ex-tank East China main ports and CFR China price decreased by $9/mt to $609/mt.

Since mid-June, most market participants expected that total MEG inventory in China domestic market could decreased by around 100-150kt in July-August. However, with the cancelled turnaround of CSPC #2 and possible delayed turnaround of Satellite Petrochemical, the output from non-coal-based MEG units would increase.

In terms of coal-based MEG, Xinjiang Tianye raised the run rate of its 600kt/year unit, planned to restart its 300kt/year unit; Shanxi Meijin raised operating rate of its 300kt/year unit; Hubei Sanjiang delayed its turnaround. Coal-based MEG output was expected to increase as well.

After the revision for the supply-demand forecast, total MEG inventory was expected to increase by around 100kt in June-July, would slightly decrease in August, and increase again since September.

Given weakening supply-demand structure, rising port inventory, decreasing ethane and pithead coal prices, the weakness in commodity futures market, MEG prices are expected to keep decreasing.