MEG market sentiment pressured by increasing supply

In April, the arrival volume of MEG at ports increased more than previously expected. The main ports are understood to have received between 450kt to 500kt. Considering the volume at secondary ports, this week's revised estimate for April's MEG imports is around or slightly above 550kt. However, due to Yunneng Chemical's maintenance shutdown and the concentrated maintenance of multiple traditional units, the destocking volume of MEG in April remains above 100kt.

However, from the perspective of inventory structure, the increase in arrivals at ports has weakened the expectation of destocking of visible inventory. The inventory at East China ports in April is expected to fluctuate around 850kt.

Starting from May, with the end of the coal-to-chemicals spring maintenance and the restart of refineries such as ZRCC, ZPC, and Zhongke, the domestic monthly production of MEG is expected to continue to surpass 1.7 million tons.

On the import side, although the restart of the 828kt/year plant of Nan Ya has been postponed until the end of April, U.S. exports to China in February were between 80-90kt. With ongoing poor local demand, future export expectations remain high. Attention is focused on the increase in supply from the United States in the second half of the year, with preliminary estimates for import volumes in April to June at 560kt, 520kt, and 550kt, respectively.

Based on this analysis, it is speculated that after May, MEG will enter an inentory accumulation phase, and increase will depend on plant dynamics. However, if downward price pressure leads to new supply squeezes, the supply-demand landscape will change accordingly.