China's MEG supply to decrease in May

China domestic MEG supply will decrease in May with output reduction of several producers.

1. Xinjiang Tianye will shut its 600kt/year Phase III syngas-based MEG plant in the second week of May for about one month. June contract supply to a few polyester plants were heard to be reduced.

2. Zhejiang Petroleum & Chemical, ZPC, will shut one cracker with 1.4 million mt/year ethylene capacity on May 10. ZPC will cut the operating rate of MEG units to about 30-40% of its 2.35 million mt/year capacity.

3. Satellite Petrochemical plans to shut one 900kt/year MEG unit in Jiangsu in mid-May for about one month of maintenance. MEG output will be reduced by a half.

4. Weihe Binzhou Chemical plans to shut its 300kt/year syngas-based MEG unit on May 8 for about 3 weeks. The unit was now running at full capacity.

Those maintenances are all planned ones but with the shutdown timing fixed, the supply reduction becomes more certain.

Coal-based MEG supply to inland markets will decrease and domestic cargo supply in East China will also decline. Some terminals in East China ports have received notices about less cargo arrivals in May. Offtake in ports will accelerate in May.

Coupled with less import cargo arrivals in May, MEG port inventory will apparently decrease. And total MEG inventory is expected to decrease by about 200kt in May-June.

MEG prices are expected to fluctuate up in May on favorable fundamentals.