Asia MEG on third week of gains amid bullish market sentiment

SINGAPORE (ICIS)–Spot monoethylene glycol (MEG) prices in Asia are poised for a third straight week of gains, rising on bullish sentiment in both upstream and downstream markets, industry sources said on Friday.

Weekly spot prices were last assessed on 21 October at $642.5/tonne CFR (cost and freight) CMP (China Main Port) on 21 October, with cumulative gains estimated at 3% since end September.

Daily MEG spot prices stood at $$658-663/tonne CFR CMP on 27 October, ICIS data showed.
Average spot prices in China rose above $660/tonne CFR CMP early in the week, and remained at those levels until mid-week.

“It appears that market sentiment has improved quite a bit for now,” a producer said.

Prices are being driven up by improved sentiment following gains in the crude futures and downstream purified terephthalic acid (PTA) markets, industry sources said.

MEG demand turned out surprisingly strong in October, the trader said.

Rising daily spot prices early in the week boosted trading activities, as market players were worried that the uptrend will continue, a trader said.

Operating rates at downstream polyester fibre and yarn facilities have improved in October, and inventory levels have declined because of better sales, industry sources said.

Polyester fibre and yarn prices have also been rising since the start of the month, boosting sentiment in the MEG market.

For the week ended 21 October, average spot prices of partially oriented yarn (POY) 150 denier (D) stood at $0.94/kg FOB (free on board) China, gaining close to 6% since the start of the month; while polyester staple fibre (PSF) 1.4D spot prices rose by close to 4% over the same period to $0.915/kg FOB China, according to ICIS data.

Spot prices of polyethylene terephthalate (PET) bottle chip grade were assessed at $860/tonne FOB China for the week ended 21 October, up from $855/tonne FOB China in late September, the data showed.

The polyester filament yarn and fibre markets account for almost 80% of the China polyester market, while PET accounts for remaining 20%, according to market sources.

Focus article by Eric Su

Picture: Reels of coated thread for textile fabrication. The textile industry is the main downstream of monoethylene glycol (MEG). (Source: PhotoAlto/REX/Shutterstock)