China's MEG Inventories Likely to Increase in Q2 of 2023 Due to High Import

Europe: The price of MEG (Mono-Ethylene Glycol) has decreased in the European market due to a drop in domestic demand following the earthquake in Turkey. As a result, sources in the US and Iran switched their 30,000-40,000 tonnes of exports back to the Chinese market. However, the end of February 2023 saw the loading of these cargoes, and March and April 2023 are anticipated for their arrival in China.

The import supply of MEG into the Chinese market will expand due to the redirection of the shipment. The second quarter's average import volume is expected to be around 550,000 tonnes. However, it is still important to keep a close eye on shifts in foreign demand and plant stability. For now, the price for MEG in Europe and the Chinese market have declined by 1.2% in both nations during the week ending 10th March 2023.

On the demand side, the Polyester operating rate has increased to 86%, and it is anticipated that this operating rate will continue to be high between March and April 2023. Unfortunately, the downstream orders for MEG have been disappointing, and more testing is still required to determine whether the actual usage improvement will occur or not.

However, the new Indian Oil Corporation (IOC) facility in India has been running efficiently, which has led to some local imports being replaced due to the reorganization of the supply and demand structure. With weakening import demand for MEG in Europe, some deep-sea cargoes may be reallocated.

According to the ChemAnalyst Forecast, "The price for MEG is expected to remain on the lower side, as the current inventory of MEG stands at about 1.05-1.1 million tonnes and is currently running high. Meanwhile, more shipments are anticipated to be reallocated to China in March and April as a result of the decline in European demand for MEG."