20 March 2012 07:50 [Source: ICIS news]
By Judith Wang and Becky Zhang
SINGAPORE (ICIS)--Spot monoethylene glycol (MEG) prices in ?xml:namespace>
MEG prices in Asia closed at $990-995/tonne CFR (cost and freight) CMP (
The price slump surprised market players, who were mostly expecting spot MEG values to remain firm throughout the year because of tight supply.
“The market is so confusing this year. Last year, everyone said MEG supply will be tight and prices will be firm this year, but the truth is [the] opposite,” a trader said.
“It is very difficult to predict where the market will go - continue to fall or bottom out? No one knows!”
MEG inventory at Chinese ports was at record level - nearing 800,000 tonnes late last week.
Most market players – from traders to end-users – have been stocking up on inventory anticipating availability of spot material to be constrained this year, with no new capacity coming on stream.
Actual demand has been weak as downstream polyester makers have cut production on poor margins, keeping MEG inventory at ports high.
Spot MEG prices had been stagnant for three months until 13 March, when a small group of traders started offloading volumes to make storage space available for incoming shipments in
The consequent fall in prices triggered panic-selling, which was aggravated by the sharp decline in Chinese equities markets on 14 March, that continued through 19 March.
MEG demand from downstream polyester sector has remained weak, given slowing consumption from textile converters, market source said.
Chinese polyester yarn producers currently have more a month’s worth of inventory, prompting some players to cut run rates at facilities to 60-70% this month. Average operating rates at polyester yarn plants in
“The [MEG price] outlook is very mixed," said an end-user, adding that the price trend in the MEG market deviates from that of feedstock ethylene.
“[MEG feedstock] ethylene is still high, but MEG prices are so soft,” he said.
At midday on Tuesday, spot ethylene prices in
A number of Chinese polyester makers said that the peak manufacturing season for textiles may not kick in as usual in March, given soft external demand amid a general weakness in the global economy.
($1 = €0.76)
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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