For the Quarter Ending June 2021
Prices of MEG climbed up consistently throughout the quarter across North America region, backed by improved demand from downstream sector, while the availability remained low to satisfy the overall need of the domestic market of USA. Major manufacturers tried to ramp up their plant utilisation rates, which were running on low capacity since previous quarter due to unfavourable weather conditions. In addition, Lotte Chemicals witnessed an unplanned plant turnaround during the month of May, due to some technical issue in their Louisiana plant. Meanwhile, overall supply activities remained tight throughout the quarter in USA, while demand remained high from downstream PET manufacturers. Therefore, prices of MEG rose from USD 1364/MT to USD 1440/MT in the April-June timeframe in USA.
MEG demand varied country over Country in Asia during this quarter. In China, demand for MEG from domestic market remained modest to firm from downstream PET manufacturers, while having firm availability to satisfy their domestic needs. Moreover, major China based manufacturers booked huge cargoes for Europe in the meantime. While Indian MEG market struggled with low prices due to infirm demand in effect of pandemic in the country. In addition, after slipping to its lowest, prices kept fluctuating during the month of June due to low ample stock availability and fluctuating demand from domestic and international market. Therefore, after couple of fluctuations, prices of MEG settled at USD 745/MT during final week of June in India.
Europe witnessed firm demand for MEG during this period. Europe slapped anti-dumping duty on manufacturers of Middle East during May, which opportune Asian manufacturers to export their cargoes to European buyers. Thus, a large amount of cargo was also booked by China based manufacturers to satisfy the overall demand. In addition, European countries also struggled with fuming freight cost that exacerbated the overall scenario for MEG across the region.
For the Quarter Ending March 2021
North American MEG production was disrupted due to US gulf storm, which halted more than 68% of the total upstream Ethylene production of US. Several major MEG plants like Indorama Ventures with an annual capacity 358,000 MT of MEG, Lotte chemicals with capacity 700,000 MT/year, MEG Global with a capacity of 750,000 MT and few others were shut due to the freezing storm. These shutdowns narrowed the production of MEG across the region and led to a global shortage. Thus, the prices of MEG fluctuated with the price trend of upstream Ethylene, which hovered around USD 1155 per MT during February 2021. Later during end of march the prices of MEG and upstream Ethylene stopped accelerating, as the US production activities started to resume.
Demand for MEG across Asia remained firm but supply remained tight which supported its prices. Narrowed production and lower imports from the US and premium imports from the European countries considerably contributed to increase the prices of MEG across the region. Plants like Sanjiang fine Chemicals with MEG annual production capacity around 380,000 MT declared a maintenance turnaround while Far Eastern Union Petrochemical Ltd. with MEG production capacity 500,000 MT annually also reduced its plant capacity from 100% to 90% to safeguard margins. In addition, Chinese lunar holidays stopped the production of several plants and that reduced their inventories level, it is estimated that average prices of MEG across Asia increased by more than 12% after Lunar holidays. However, in India, CFR prices rose by 35.17% from January and settled at USD 814.47 per MT by the end of the quarter.
Europe had an opportunity to fill in the supply gaps created by the US market amid the winter storm disruption in February which affected the overall production from Central America. After the US Gulf Coast storm, export pressure on European manufacturers increased majorly from Asian countries. Moreover, increased freight and container cost also impacted the prices of upstream Ethylene, which ultimately led to rise in prices of MEG across the region.
For the Quarter Ending September 2020
Asian MEG market witnessed record breaking high supported by strong polyester demand and tightened inflow of cargoes from the US. Prices of Asian MEG reached a steep high in nearly six months with several production cuts implemented due to high MEG-Naphtha spread. A renowned producer of South Korea delayed the start-up of its plants from a maintenance turnaround due to eroded product margins. As US is the major exporter of MEG to Asia, multiple plant shutdowns implemented in wake of Hurricane Laura further exacerbated this supply tightness. However, with new plants coming onstream in China by the next quarter, ample production of MEG is anticipated to weigh upon its strong market sentiments.
With revival of the market fundamentals in the automotive industry after getting a huge blow from pandemic and lockdowns, the demand for MEG has witnessed promising gains in the third quarter. However, the production cuts implemented in many MEG plants in the country in fear of Hurricane Laura has plummeted the export potential of the region leading to comparatively lower revenues in the comparison to the previous quarter. Traders are optimistic over increased buying activities from eastern countries on stock piling of product to abate the supply shortage due to China’s National Day holiday in October.