China domestic MEG to feel pressure from mounting Q4 supply

Cindy Qiu

24-Oct-2017

SINGAPORE (ICIS)–Domestic monoethylene glycol (MEG) prices in China are expected to come under pressure from mounting supply in the fourth quarter as good production margins are encouraging producers to ramp up output.

On 23 October, MEG prices closed at Chinese yuan (CNY) 7,450-7,630/tonne ex-tank, down by CNY10-30/tonne from the previous sessions, according to data compiled by the China editorial team at ICIS.

China’s domestic plants are operating at an average rate of 70-80% this year, up from about 60% in 2016.

This is partly due to the new MEG capacities of Yangmei Shouyang in the northern Shanxi province and from Yongcheng Yongjin in the central Henan province. They started up a 200,000 tonne/year facility each late last year.

Meanwhile, some scheduled plant turnarounds were postponed amid current strong production margins for MEG, whose domestic prices have spiked by more than 25% since early May.

Zhenhai Refining and Chemical Co has decided to cancel its planned three-week turnaround at its 650,000 tonne/year plant at Ningbo in Zhejiang province, a company source said.

In the next few months, domestic producers are unlikely to conduct turnarounds at their plants and would probably keep their run rates high at 70-80%, industry sources said.

Meanwhile, supply from imports are growing. In the first nine months of 2017, China’s MEG import volumes jumped 19% from the previous corresponding period to about 6.6m tonnes, official data showed.

China is expected to keep its MEG import volumes high in the fourth quarter, with fresh supply possibly hitting the market from India’s new 750,000 tonne/year facility that recently started up.

Demand, which turned out better than expected in the third quarter, could be buoyed up by the expected start-up of about 2.5m tonnes/year of downstream polyester capacity in China in the last three months of 2017.

These include Jiangsu Sanfangxiang’s 500,000 tonne/year and Jiangyin Chengxing’s 600,000 tonne/year PET bottle chip plants, as well as Xiaoshan Hongjian’s 400,000 tonne/year PET filament plant.

The annual shopping spree in China on 11 November should also help boost demand for MEG in the near term, while the onset of winter would likely translate to stronger demand from the antifreeze solutions segment, industry sources said.

Picture: A Chinese worker handles production of yarn at a textile factory in Xiayi city, central China’s Henan province (Imaginechina/REX/Shutterstock)

Focus article by Cindy Qiu

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?