Global MEG Prices Fall Entering April 2024, High Inventories to Blame
Global MEG Prices Fall Entering April 2024, High Inventories to Blame

Global MEG Prices Fall Entering April 2024, High Inventories to Blame

  • 17-Apr-2024 4:03 PM
  • Journalist: Harold Finch

In the first half of April 2024, Mono Ethylene Glycol (MEG) prices witnessed a diminishing trend on the global stage, influenced by several factors.

In the US market, MEG prices declined notably by 2.3% during the first week of April, primarily due to lacklustre demand from domestic downstream sectors. Despite stabilized MEG upstream, Ethylene Oxide prices, subdued demand in industries like PET and Antifreeze further exacerbated the situation. Similarly, the German market saw a 1.5% decrease in MEG prices, driven by lower production costs and feedstock prices. Despite this, MEG demand remained robust in the PET manufacturing sector, particularly during the Ester festival.

In the Asia-Pacific region, particularly in the Chinese market, the cost of mono ethylene glycol (MEG) experienced a slight decline of 0.9%. This decrease in MEG prices can be attributed to ample inventory levels resulting from swift production rates and reduced feedstock prices, leading to decreased overall production costs. Despite an increase in demand from downstream sectors like the PET industry and a rise in feedstock prices, MEG prices remained subdued due to heightened production rates. After the holiday period, numerous Syngas-based manufacturing units resumed operations, surpassing operating rates for the week. Similarly, coal-based MEG production units increased their operation rates due to lower international coal prices. Notably, China's seaborne imports of coal grade surged by over 17% in the first quarter compared to the same period in 2023, driven by robust power demand and competitive seaborne prices.

Globally, crude oil prices continued to rise, with Brent crude surpassing the 91 USD/barrel, fuelled by escalating geopolitical tensions in the Middle East. Output cuts by OPEC and its allies raised concerns about potential supply disruptions, adding further pressure. Notably, US refineries operated at 88.6% capacity, refining 15.9 million barrels per day, with a slight decrease from March last week. Meanwhile, daily crude oil imports declined to 6.6 million barrels, influencing the overall commercial crude oil storage in the US, which increased by 3.2 million barrels.

Moreover, there was a favourable development concerning freight charges affecting the MEG prices, particularly from North America (west coast) to China. In first week, freight charges stabilized, attributed to the Ester festival, leading to a significant decline in cargo movement. Shipping alliances increasingly opted to bypass various ports in Favor of larger hubs, contributing to this phenomenon.

In conclusion, analysts anticipate the MEG market in mentioned countries may experience a further decline in coming weeks. High inventory levels in feedstocks, reduced demand from downstream sectors, and favourable freight charges played significant roles in shaping these trends.

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