SINGAPORE (ICIS)--China’s monoethylene glycol (MEG) imports in 2017 increased 15.6% to 8.75m tonnes, backed by a stronger-than-expected performance in downstream polyester markets.
In 2016, the country took in 7.57m tonnes of MEG, according to China Customs data.
Imports of the material grew at a double-digit pace last year, despite a 1m-tonne increase in domestic MEG production to 6.13m tonnes, as overall consumption grew 17.2% to 14.86m tonnes, according to ICIS data.
More than 90% of the MEG produced globally goes into the manufacture of polyester, which is largely used in the textile industry, as well as in the production of polyethylene terephthalic (PET) bottles.
China's polyester sector had been strong amid improvement in the general macroeconomic conditions. The world's second-biggest economy snapped six years of steady slowdown in 2017 to post a GDP growth of 6.9%, up from a 26-year low of 6.7% in 2016.
Capacity growth in polyester textile last year was estimated to have grown by around 11%, up from 3.6% in 2016, according to ICIS data. Market players were originally expecting a dismal growth of about 2.3% for 2017.
Market participants expect China's MEG imports to continue increasing this year in view of a 5-6%projected growth in polyester capacity.
Despite continued expansion in domestic MEG production, the country has remained heavily reliant on imports, which accounted for 58.9% of the total consumption in 2017. In 2016, imports’ share to total consumption at 59.7%.
China will continue to raise domestic production as it strives to be more self-sufficient on its petrochemical requirements, but this may be limited by a lack of feedstock ethylene in the country.
With the Chinese government taking strong measures to cut down on usage of coal for power generation as part of its anti-pollution policy, the new MEG plants may have to operate at low rates, similar to other coal-based plants in China.
Focus article by Eric Su
Picture: Piles of containers at the Ningbo-Zhoushan port in Zhejiang province, China. (Source: imagineChina/REX/Shutterstock)