H2 January MEG market review

Cost: Crude oil and coal prices were broadly stable, naphtha and ethylene in Northeast Asia has showed an upward trend. For MEG, previously low ethylene prices were relatively favorable for companies producing MEG with external sourcing. As a result, there are indications of a rate increase for Far Eastern Union Petrochemical's 500kt /year MEG unit in Jiangsu. And if ethylene purchase is smooth, the company may further increase to full capacity.

During the Chinese New Year holidays, the price of coal for enterprises was stable. The cost of coal for two coal-based MEG producers in Henan was around 1,350 yuan/mt, and the price of coal for gasification in Inner Mongolia was around 1,050 yuan/mt.

Natural gas and propane in the United States were broadly stable. Propane to MEG margins has increased. Recently, Nan Ya US Corp plans to restart #1 unit. The company also shows intentions to restart #2 unit, but final decision depends on the contract price of propane.

Inventory increased, sales were sporadic

In January-February, the accumulation of MEG inventory is expected to be large, with an estimate of around 600kt. As of end-January, in addition to the increase in port inventory, there is also a certain increase in MEG/polyester producers.

Plant operation

Several large integrated units were shut while operations of coal-based units were stable. On Jan 28, operating rate of all MEG plants in Chinese Mainland decreased by 5.3% from the pre-holiday level to 62.81%, and of coal-based MEG plants was stable at 57.5%.