05 January 2012 05:33 [Source: ICIS news]
By Becky Zhang
SINGAPORE (ICIS)--The prices of monoethylene glycol (MEG) in ?xml:namespace>
Only one MEG plant is scheduled to be started up in the region this year: Ningbo Heyuan Chemical’s 500,000 tonne/year plant at
Zhejiang Tiansheng Holding Group, the parent company of Ningbo Heyuan, invested yuan (CNY) 5.8bn ($922m) in the project.
It is uncertain how the company will secure feedstock methanol and whether the new technology is stable, a major MEG producer said.
The company aims to complete building the facility in July and start commercial operations in October.
Given the limited capacity expansion,
The new polyester facilities will need an additional 2.9m tonnes/year of MEG supply, leaving a shortfall of 2.4m tonnes/year after the start-up of Ningbo Heyuan’s plant.
Producing one tonne of polyester requires 0.34 tonne of MEG.
“We are unable to allocate more MEG contract terms for our new polyester plant [that will be] launched in 2012 as the producers have no more to supply,” a Zhejiang-based polyester maker said.
Some major MEG producers have reduced their discounts for their 2012 contracts by 1-2%, traders and end-users said.
The operating rates at
MEG supply is also likely to be tightened during March-May this year because of planned shutdowns in the region.
Other MEG majors such as
The shutdowns at the facilities of these companies are expected to affect up to 13% of
Fewer shutdowns have been planned for the second half of 2012.
SABIC, the world’s largest MEG producer, has yet to announce its 2012 turnaround schedule at its MEG plants which have a total capacity of 6.4m tonnes/year.
Given the strong supply-demand fundamentals for 2012, traders have been keeping a close eye on the market since November 2011 as they were waiting for prices to bottom out before building up their inventories for 2012.
“We started buying [cargoes] from late November as we don’t think prices will drop further,” a major Nanjing-based trader said.
The traders’ buying interest was supported by expectations that the economies of Europe, the
Asia MEG prices fell to $1,040-1,065/tonne CFR (cost & freight) CMP (
“The worst situation should have already passed,” a Shanghai-based trader said.
In December, Asia MEG prices rose by $30-45/tonne month on month to $1,085-1,095/tonne CFR CMP for the week ended 30 December on high buying activity, the data showed. This was despite the mounting inventory pressure in
The volume of December-loading MEG cargoes from US headed towards Asia, particularly
This is compared with the 4,138 tonnes of MEG
Asia MEG margins in 2010-2011
($1 = CNY6.29)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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Asian Chemical Connections