MEG supply outside China gradually increases

From January to April, China's MEG imports have been relatively low, with a monthly average of approximately 490,000 tons, which marks a decline of roughly 30% compared to the same period in previous years. Notably, the average import volume in March and April was only about 450,000 tons, which fell significantly short of market expectations. Factors contributing to the slower pace of arrivals during this period include concentrated maintenance of MEG units in Saudi Arabia during the first quarter and the impact of the cold wave in late January and early February leading to temporary closures in North America.

Starting from May, there will be a gradual increase in the supply of MEG from overseas sources. Based on the current imports this month, it is expected that the import volume will recover to around 520,000-530,000 tons. The main contributing factor to this increase in imported MEG is the influx of US cargo. Since the end of March, there has been a significant increase in local supply following the successful restart of US Nan Ya #2. Since April, these supplies have been actively shipped to China, arriving without any issues by mid-May. Looking ahead, it is expected that the overseas supply will continue to increase, particularly in terms of US, Iranian, and some short-sea cargo.

In the United States, the current price of ethane is comparatively lower than last year, approximately one-third of its previous value. Consequently, the chemical plants in the region can benefit from a significant cost advantage. Presently, the average operating rate of MEG plants in the local area rests at around 90%. The supply within the North American market is abundant, and the market outlook suggests that local prices will continue to decrease throughout the year. Projections indicate that the amount of US cargo arriving in China can be expected to remain high from June until August.

Regarding Iranian shipments, the Pars Glycol plant has commenced operations this year and has been operating smoothly, resulting in a significant increase in local supply compared to previous years. However, European demand has remained stagnant, with only a few spot purchases being made, and some demand has been lost due to the early Turkish earthquake. Starting from mid-to-late May, there has been a significant increase in bids for Iranian goods. Two ships have been scheduled for loading, and subsequent shipments are gradually being dispatched, with arrival in China expected in late June. It is estimated that the volume of Iranian goods arriving in June could reach 80,000 tons, and we will continue to monitor the actual discharge situation. It is understood that the local inventory of MEG in Iran is high and is expected to remain so in June. A similar trend has been observed in the Indian market, where around 20,000 to 30,000 tons of Indian goods were put out for tender last week. We will continue to monitor the actual transaction situation.

MEG prices in different markets

Furthermore, thanks to the enhancement in the cash flow of naphtha-based MEG, the supply of foreign products has moderately risen. PRefChem in Malaysia resumed operations in late May, and the current plant efficiency is acceptable. A few shipments are scheduled to be loaded by the end of May and shipped to China. We will keep track of the plant's operational stability. Also, PTT GC Glycol's 400kt/year plant in Thailand is set to restart in June and will likewise curtail some supply to the Chinese market. In the Northeast Asian region, the bids for South Korean products have surged since late May, with an anticipated transport of around 10,000-15,000 tons to China in June, which marks a substantial increase compared to previous days.

The global supply of ethylene glycol is on a gradual incline, thanks in part to increased contributions from the United States and Iran. Moreover, we are monitoring the sustainability of offshore tendering practices to ensure stability in supply. Projections indicate that import levels of ethylene glycol may reach approximately 600,000 tons during June and July.