Polyester Demand Induces Optimistic Momentum Shift in China Mono Ethylene Glycol Values

After a sluggish start for Mono Ethylene Glycol in the initial weeks of 2022, finally MEG prices have shift momentum towards bullish values on the back of resurgence in demand from polyester industry. Other than increasing demand from downstream industries, consistent rise crude oil and coal values are further piling the cost pressure over upstream Mono Ethylene Glycol and PTA.

Mono Ethylene Glycol prices fell incessantly during Q4 where Mono Ethylene Glycol lost close to 16% from October to December. However, market has shown some signs of recovery as prices gained more than USD 30 per MT during the third week of January 2022. Price turnaround has also been introduced due to increasing stocking activity in the domestic market after robust destocking that took place in December.

Polyester filament yarn market has also witnessed an uptrend during the last week where prices turned bullish after a sustained period of downward momentum. Production of Polyester has also increased in January as in lieu of sluggish demand, key manufacturers in the region came to a consensus of production reduction of 20% in late November.

Crude oil has been on an uptrend rally in the initial weeks of 2022, WTI values crossed USD 84 per barrel on Monday (17th January 2022) while Brent crude oil prices crossed USD 87 per barrel mark on the same day. These values of crude oil are at their highest in the past seven years. Surging crude prices have pressured key value chains including Polyester chain.

As per ChemAnalyst, “Robust cost pressure from upstream crude and increasing downstream demand is expected to result in an uptrend rally of Mono Ethylene Glycol values in China. Lunar New Year holidays may cause some stability in Mono Ethylene Glycol market sentiment. However, MEG is likely to rebound in China and further gain in late February and March.”