MEG remains firm before new units getting products

MEG prices have been remained firm recently on tight spot availability before new units getting MEG products. Satellite Petrochemical has no MEG products yet at its 900kt/year unit of its 1.8 million mt/year plant in Lianyungang, Jiangsu province. Zhejiang Petroleum & Chemical is expected to get MEG products in mid-to-late May at its 800kt/year unit of its 1.6 million mt/year Phase II plant in Zhoushan, Zhejiang province.

Operating rate of coal to MEG units has dropped to around 55% recently due to unplanned shutdown of ECO Coal Chemical, Lihuayi and Yankuang Rongxin, and the rate would recover slightly with restarts of these units. However, the run rate would decrease again since late April due to maintenance of Qianxi Coal Chemical, Lihuayi and ECO Coal Chemical.

Meanwhile, Yangmei Chemical is also expected to maintain Shouyang unit considering catalyst lifetime. Many syngas-based MEG producers had maintenance in the second quarters of 2019 and 2020. Usually, catalyst lifetime in syngas-based MEG unit is around one year. And at the end of catalyst lifetime, there would be frequent unit issues.

Increase in syngas-based MEG output would be limited in April and May due to unit maintenance. In terms of new unit, Hubei Sanning plans to commission its 600kt/year syngas-based MEG unit in end April, and is expected to get MEG products in June.

MEG supply and demand forecast

Considering the startup delays of new units and syngas-based unit maintenances, MEG supply and demand is expected to be broadly balanced after revising our forecast. And total MEG inventory is expected to move higher in June.