Near-term MEG outlook turns positive amid unit issues

Recent weeks have brought a run of unexpected MEG supply disruptions. Several Sharq units have been forced offline by power issues. ZPC has cut operating rates sharply from mid-July because one cracker turnaround has constrained ethylene feed and the MEG unit itself has technical problems; rates fell to an unexpectedly low level and are likely to remain reduced for roughly half a month. In addition, Satellite Petrochemical plans maintenance on a 1.25 million t/yr cracker in August. The market had expected its 0.90 million t/yr MEG unit to restart in late August; current indications suggest that if another of its crackers is also taken down for maintenance, that MEG restart will likely be pushed back.

These disruptions imply unplanned supply losses across both import flows and domestic output through August–September. Key elements:

Iran: Liftings have been light so far in July. Only two vessels are expected to load in the month, totaling roughly 40–50 kt-below earlier expectations.

Saudi Arabia: Following the recent upsets, loadable inventory for mid- to late July is tight. Suppliers report slippage in near-term loading programs, which could trim August arrivals and disrupt discharge timing. Watch the Sharq restart timeline; extended downtime would magnify the impact.

Shell Singapore: The 0.90 million t/yr MEG unit is slated to shut around mid-August in line with an upstream cracker turnaround expected to last about 1.5 months. Some August cargoes from the region remain on offer; subsequent volumes bear watching.

Putting the pieces together, we now expect China's MEG imports in August to fall below 600 kt-materially lower than prior assumptions. On the domestic side, reduced output at ZPC and Satellite Petrochemical further trims supply.

Balance sheet implications: Using indicative polyester operating rates of 89% for July, 88% for August, and 91.5% for September, the MEG balance shifts from a previously anticipated sizeable surplus to a modest draw in July–August, with September tracking roughly balanced. Given currently low reported visible stocks, any shortfall or delay in August vessel arrivals could quickly swing near-term sentiment to the firm side.