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MEG plant operating rate recovers, port inventory increases

2022-02-08 08:21:51 CCFGroup

MEG plant operating rate recovers to around 75%

During the Chinese New Year holidays, some MEG producers restarted MEG units, including ZPC II-1, HNEC Yongcheng #2, Weihe Binzhou Chemical and Xinjiang Tianying, etc. The operating rate of all MEG units in China has recovered to around 75% and of syngas-based units to around 65%. The EO/EG adjustment also contributed around 3% recovery. Sanjiang, Fund, Sinochem Quanzhou and FREP raised EG output proportion.

Discharges in Zhangjiagang and Shanghai accelerate

More cargoes arrived at Zhangjiaqgang and Shanghai during the holiday and discharges in Jiangyin also increased. Coupled with slower offtake, MEG port inventory posts clear increase today.

MEG tank inventory in East China main ports increased by 113kt from to 787kt on Feb 7. Tank inventory in Ningbo decreased by 1kt to 51kt. Offtake volume in one major terminal of Ningbo was around 2,500-3,000 tons per day in Jan 24-Feb 6. Inventory in Shanghai&Changshu was 99kt, up 25kt; Zhangjiagang 418, up 78kt; Average daily offtake volume in one major terminal was around 4,500-5,000 tons by truck. Taicang 85kt, down 5kt. Average daily offtake volumes in two major terminals were about 4,000-4,500 tons; Jiangyin&Changzhou 134kt, up 16kt.

MEG tank inventory in kt		2022-1-24	2022-2-7	Change
Ningbo	Gangbu	52	51	-1
	Qingzhi
	Jin Hai Ling
	Ningxing
	Ningyuan
	Daxie
Shanghai & Changshu	Yangshan	74	99	25
	Benny (Qianhong)
	Donglian
Zhangjiagang	Changjiang International	340	418	78
	Kailun
	Liche
	Shuntian (Bingjiyan)
	Vopak
	Oriental Energy
Taicang	Yangtze Petrochemical	90	85	-5
	Power Shell Petrochemical
Jiangyin&Changzhou	Chengxin (Huaxi)	118	134	16
	Chengli
	Sanfame
	Litian P & C
	Hengyang
	Xinrun
Total		674	787	113

Q1 surplus estimated at 500-550kt

Surplus in MEG supply (inventory buildup) is estimated at 500-550kt for the first quarter, higher than previous expected. Operations of MEG units outside China were stable. Production margins of coal-based MEG improved with the increase of oil prices. Eyes could rest on naphtha integrated MEG units.

Cost support remains on rising oil prices

In early Feb, WTI oil futures surpassed $90 a barrel for the first time since 2014. MEG prices have increased on the back of firmer costs, but the upward room might be limited on oversupply and recovery in China domestic output. Meanwhile, ethylene-naphtha spread continued decreasing, some naphtha-fed steam cracker may keep running at lowered rate. Eyes could rest on the operations of naphtha-integrated units.

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