MEG up after explosion at Asaluyeh, Iran's MEG supply unaffected

MEG spot prices increased Wednesday tracking the sharp rise in futures, as market sentiment was boosted by concerns of Iran's supply. MEG futures moved up apparently in line with the hike in methanol futures due to the massive shutdown after the explosion at Asaluyeh industry park, Iran. The explosion occurred along an oxygen transmission line. However, MEG unit operations (Farsa and Morvarid) at the industry park were not affected.

Higher traded prices were around 5,020yuan/mt. Spot-EG09 spread was 25-30yuan/mt. CFR prices were around $645-650/mt in late session.

Iran's Farsa Chemical's 400kt/year MEG plant and Morvarid Petrochemical's MEG plant at Assaluyeh industry park remain operating and June supply will not be affected.

Iran's Marun Petrochemical is expected to restart its 445kt/year MEG plant at Bandar Iman at the end of May. The plant was shut in end March for maintenance.

Iran's June MEG supply will remains normal. However, the oxygen supply disruption may affect operations of crackers. Focus could be on the resumption of oxygen transmission line and public facilities. Operating rate of crackers might be reduced if the repairs at facilities are slow. Then Iran's July MEG supply might be affected.

Currently, MEG market sentiment is still weighed by the upcoming startups of new units. However, MEG supply outside China remains tight. China will see more cargo arrivals in early June, but there won't be effective recovery in imports. Meanwhile, MEG port inventory remains low. Total MEG inventory will increase in June, but the increase still depends on timing of new capacities.