U.S. Arctic Freeze Impacts the Chinese Mono-Ethylene Glycol Supply
- 30-Dec-2022 12:27 PM
- Journalist: Robert Hume
A few Mono-Ethylene Glycol (MEG) plants in the U.S. were shut down due to the closure of power plants, including those owned by Lotte, MEGlobal, Sasol, Indorama, and Shell. In Baytown, Texas, Chevron Phillips Chemical said it was closing the ethylene units at its Cedar Bayou plant because of the predicted extended freezing temperatures. Therefore, the restoration of the power facilities is necessary for the restart.
The blizzard significantly impacts production capacity, although the supply to China is not directly impacted. According to reports, U.S. MEG exports to China grew from June to September, with an average supply of about 80 KT each month. From end-August to mid-December, the cargo landed in China slowly. Thus, the anticipated 20-30 KT of U.S. MEG exports to China were extremely low. Still, the Chinese manufacturers have stabilized the price of MEG for this week.
Under the influence of the cold wave in December 2022, the local logistics conditions in the U.S. were not sufficient, and some of the cargo initially planned to be shipped to Europe was delayed. China's MEG price is now the lowest globally, so suppliers are more likely to reallocate MEG supplies to Europe and other markets. However, the rise in COVID cases in China is also impacting the supply situation, as logistics issues and the difficulty in finding laborers for loading and unloading are evident amidst unprecedented demand outlooks.
Thus, ChemAnalyst predicts gradual changes in the MEG price structure if the demand from China continues to be strong. There is still a state of hesitancy right now, as China is gloomy with the rise in COVID cases. Also, the export market is struggling with production as the U.S. closure of the power plant impacts the operating rate. Sources confirm that if there is no significant damage to the MEG plants, the power facilities may be progressively restored around the end of this week. At that time, we will pay attention to the actual state of the facility.