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MEG fundamentals improve with delayed restarts

2022-05-26 08:04:22 CCFGroup

MEG supply recovery outside China domestic market remains slow with the delayed unit restarts as production margins remain negative. Supply from Saudi Arabia and Iran have also decreased. In the next 2-3 months, China's MEG imports are likely to keep low.

Company	Location	Capacity,kt	Maintenance
Nan Ya #2	Taiwan,China	360	shut on Jan 10; no clear restart timing
Nan Ya #4	Taiwan,China	720	t/a Mar 29, 2 months; restart delayed to mid-Jul
Lotte Daesan #1	South Korea	300	shut on Mar 14, 2 months; restart delayed to end-Jun
Lotte Yeosu	South Korea	120	mid-May, 1 month
Lotte Yeosu	South Korea	160	mid-May, 1 month
Shell	Singapore	900	t/a in Jul, 2 months
Maruzen	Japan	115	to permanently shut in May
Farsa	Iran	400	no cargoes to China in May
Nan Ya	Texas, US	360	May 3-15
Nan Ya	Texas, US	828	shut on May 7; to restart cracker on May 13

In terms of China domestic supply, MEG plant operating rate has decreased to around 59%. Further maintenance plans include: Shenhua Yulin, Hubei Sanning and HNEC Yongcheng. In short term, China domestic MEG output is expected to decrease.

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With reduction in output, MEG supply-demand structure will improve in the coming 2-3 months. The market would be balanced to tight in May and June, and is expected to see around 100-150kt inventory decrease in July amid the postponed Hangzhou Asian Games and the control of the Covid. MEG prices are expected to keep firm in short term with the improving fundamentals and firmer costs.

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