US May Cut Down Mono-Ethylene Glycol (MEG) Import to Europe During the First Half of Q1 2023
- 16-Jan-2023 5:18 PM
- Journalist: Jacob Kutchner
Europe: Mono-Ethylene Glycol (MEG) imports into Europe are predicted to fall in the first two months of the year due to unanticipated weather-related power outages in the US. The contract price for MEG in Europe increased by 0.9% for the week ending 13th January, with prices circling around USD 676/MT FD Hamburg.
In the US, Several industries were shut down in late December 2022 due to the winter storm Elliot. Amidst the declining raw materials supply and damage to public utilities, Lotte declared a force majeure on the delivery of MEG, which caused a delay in the supply of ships to Europe in January 2023. Subsequently, the share for February deliveries to Europe was also reduced to 55%.
According to sources, Lotte tried to restart its unit in the previous week of January 2023, but production was still interrupted. Meanwhile, in early January, LyondellBasell stopped producing ethylene oxide in Texas due to bad weather. Additionally, Indorama Ventures closed its Texas plant in December but was scheduled to reopen in January.
At the same time, MEG demand has been sporadic in Asia as the Lunar New Year celebrations approach from the 21st to the 27th of January in China. It is hoped that if China's tight Covid-19 lockdown regulation is lifted, demand will increase. However, as producers in China continued to cut production capacity in the face of chronically low profits, MEG spot prices in Asia increased for the first time in three months during the first week of January. Additionally, the recent strengthening of the Chinese yuan versus the US dollar has improved the buying sentiments amongst MEG consumers.
Therefore, the forecasted data by ChemAnalyst, "The partial increment in MEG prices in the first half of Q1 2023, due to the reduced supply of material in Europe. As a result of bad weather in the US, production units may get disrupted, thus reducing the MEG supply to the importing countries. Meantime, demand is anticipated to boost during the period owing to the rising orders for PET bottles in the European market.