Slow Downstream Recovery and Oversupply Push Down Mono-Ethylene Glycol Prices
Slow Downstream Recovery and Oversupply Push Down Mono-Ethylene Glycol Prices

Slow Downstream Recovery and Oversupply Push Down Mono-Ethylene Glycol Prices

  • 14-Apr-2023 12:57 PM
  • Journalist: Nicholas Seifield

Mono-Ethylene Glycol (MEG) prices have gained downward momentum during the first week of April. The Feedstock Ethylene prices dropped by 2.2% this week, while market players were stuck with unsold stocks and have been opting for price adjustments. However, the slower demand recovery in downstream derivatives further limited the price rise because the downstream polyester inventories were at a greater level. As a result, this week's MEG conversations were minimal as buyers and sellers chose to wait due to the gloomy market fundamentals.

The weakness in purchasing activity prevailed in the whole value chain, with end-use consumption in key food packaging, automotive, and polyester industries subdued. Both antifreeze offtakes and Polyethylene Terephthalate (PET) Resin offtakes have decreased, contributing to the weakness of the primary MEG demand segments. However, the antifreeze season has largely been over as we move into spring, whereas the demand for PET Resin Bottle Grade is eventually rising in the typical summer season, as consumers tend to purchase more bottled liquids. However, PET Resin demand remained weak during the first week of April. It is hoped that this will change as we approach the peak summer season.

As a result, the fundamentals of weak demand and oversupply were exerting pressure on the European MEG market, which in turn had exerted pressure on the European Ethylene value chain since the demand for the feedstock had decreased dramatically over the week. Meanwhile, MEG production rates remained at reduced levels, between 70%-80% from market sources, as producers attempted to mitigate the effects of the limited buyer appetite.

As per the ChemAnalyst database, "MEG prices may continue to trend downward in the upcoming weeks due to the weak demand, high supply, and minimal buying activity. With buyers continuing their stocked usage and not purchasing additional material, demand for MEG is predicted to stay low."

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