INTERACTIVE: Asia MEG seen supported near term by supply concerns

Source: ICIS News


SINGAPORE (ICIS)--Spot monoethylene glycol (MEG) prices in Asia may be supported in the near term by rising concerns over spot availability of cargoes, following heavy plant shutdowns in the US in the wake of Hurricane Harvey.

Market participants said that MEG cargoes from the US were unlikely to arrive in China, as inclement weather has been battering the US Gulf Coast, which is a hub for refineries and petrochemical plants.

This is aggravating concerns about tightened supply to China, where market players are fretting over the expected turnaround at a regional facility and a delay in the start-up of a major plant in India.

Generally, the impact of US cargo flows on the Asian MEG prices were limited because the total volume is smaller compared with supply coming from the Middle East or northeast Asia, market players said.

“However, given that the turnaround at [Taiwanese MEG producer] Nan Ya, volumes from northeast Asia will already be lesser. Hence, the impact of the US cargoes in the spot market will become relatively larger as well,” a trader said.

From January to July 2017, the US exported 121,085 tonnes of MEG to China, bringing the monthly average volume at 17,298 tonnes, according to data from China Customs.

The monthly average of US MEG volumes to China account for 2.5% of the total imports for July at 699,756 tonnes, the data showed.

Within Asia, supply is expected to take a hit when Nan Ya Plastics’ 720,000 tonne/year MEG line in Mailiao, Taiwan is taken off line for maintenance in early September.

The company, which has four MEG lines with a combined nameplate capacity of 1.8m tonnes/year, is currently the largest northeast Asian exporter to China.

Meanwhile, the start-up of Reliance Industries’ new 750,000 tonne/year plant in India will be delayed, providing a boost to Asian MEG prices.

Market participants were initially bearish over the market outlook for September because of expectations of more supply with the start-up of the plant.

Regional MEG prices would get a further boost as demand for the material, as well as its downstream polyester textiles, seasonally peaks in September, some market sources said.

Additional capacities in the downstream polyethylene terephthalate (PET) bottle grade sector, along with the potential restart of previously idled polyester textile facilities, could further boost MEG demand next month, they said.

Photo (top): Hurricane Harvey continues to meander slowly inland after hitting the coast of Texas as a category 4 storm seen from the GOES-16 satellite (Noaa/Planet Pix via ZUMA Wire/REX/Shutterstock)

 Focus article by Eric Su