FocusIndia becomes major MEG importer, trend to persist in 2010

12 June 2009 04:00  [Source: ICIS news]

By Salmon Aidan Lee

SINGAPORE (ICIS news)--Indian imports of monoethylene glycol (MEG) have spiked over the past year and the country could be on its way to become the second-largest market after China for the fibre intermediate, buyers and sellers said on Friday.

In February and March, MEG imports into India surpassed the 50,000 tonnes mark, according to statistics released by the Indian customs and this looked set to increase steadily going into 2010.

Just eight months earlier, in July 2008, imports were no more than 3,000 tonnes.

“Formerly, the Indian market was dominated by just one major producer, with not so significant imports from the Middle East and other parts of the world,” said a source from a leading supplier.

But that seemed to be changing, as imports had spiked as much as 90% just comparing the volumes between July and August 2008, which saw imports rising to 26,000 tonnes.

“Many new polyester plants have started up and more would startup soon,” said a source from JBF Industries.

JBF started off as a small, batch polyester producer importing fibre-grade chips just a few years back. Now it is the second largest producer of polyester filament yarns in India with a film-grade polyethylene terephthlate (PET) production unit in the United Arab Emirates.

“You see not only JBF, we have newcomers like Garden Silk Mill and Bhilosa, we’ve company now,” said a source from Indorama Synthetics, one of the country’s biggest producer of polyester and PET, as well as plants in southeast Asia, the US and Europe.

“India’s polyester industry has started a period of being squeezed by feedstock costs, as so many new polyester plants start up and they compete for the limited MEG,” said a source from Reliance Industries, the chief local supplier of the fibre intermediate and also the country’s top polyester producer.

In 2009, an estimated 1.85m tonnes of new polycondensation capacities would be added in India but there would be no new MEG plant.

“The next plant coming up is the one by [Indian Oil Corp], which is not due to be around the first or second quarter of next year,” the Reliance source said.

Hence, the only way to satisfy the growing demand of MEG is to import, said traders.

“There’re not many traders in India handling MEG now, but I think this is a growing business and we see imports rising in the next one or two years,” said a trader based in Mumbai in the west of the country.

In 2010, another 1.85m tonnes/year of polycondensation capacities could be added to the scene.

“I’ve had enquiries from Sumeet Industries, who would be testing their plant and we’ve signed contract with Wellknown,” said a major Japanese trader, who believed that India could become a major market for MEG soon.

Most market participants tend to agree, but some had reservations if India could ever grow to become anywhere near China, the world’s top consumer of MEG.

“China imports some 350,000 tonnes of MEG every month on an average, and their storage tank capacity is so big, it will remain the main market for everybody,” said a Singapore-based trader with offices in both China and India.

So while Indian MEG imports are expected to continue to grow, the market would still be a secondary one, said participants.

“Indonesia’s polyester industry is still healthy, and Thailand is still importing, and so is Vietnam and even eastern Europe; India can be big, but China will be bigger,” said a source from a southeast Asian MEG producer.

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By: Salmon Aidan Lee
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< previous article(ICIS Chemical Business podcast November 2, 2009)

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