By Malini Hariharan
There are some exceptions to the generally weak petrochemical markets seen in Asia these days and monoethylene glycol (MEG) is one such product.
Spot prices have hit a 44-month high of $1,275-1,280/tonne CFR China and are expected to soon cross $1,300/tonne, close to levels last seen in January 2008, reports Judith Wang, ICIS pricing editor for MEG in Asia.
The price spiral was attributed to speculators who were banking on tight supplies, as a result of plant turnaround in Asia and the Middle East during September-October, to keep markets firm.
Sellers were said to be in no rush to offload cargoes, while end-users were anxiously snapping up available volumes ahead of the National Day holiday in China from 1-7 October.
Purified terephthalic acid (PTA) too has risen driven by tight supplies for its feedstock paraxylene (PX). Spot PX prices were assessed $45/tonne last Friday with a delay in the start up of CNOOC -Kings Group's 840,000 tonnes/year plant at Huizhou, China and other turnarounds influencing market sentiment.
Everyone in the polyester chain is banking on strong demand during the peak manufacturing seasons for the textile sector over the next couple of months.
But there are few signs yet that demand will be as robust as last year given the uncertain economic outlook in Europe and the US.
The average operating rate at Chinese polyester plants is hovering at around 80%, the same level as August. High raw material prices have put pressure on polyester margins and any increase in operating rates will only lead to higher MEG and PTA prices and worsen the squeeze.