MEG port inventory back to 600kt

MEG tank inventory in East China main ports increased by 56kt week on week to 606kt on Oct 25. Tank inventory in Ningbo increased by 29kt to 90kt. Offertake was around 6,000 tons per day in Oct 18-24. Inventory in Shanghai&Changshu was 66kt, down 31kt; Zhangjiagang 231kt, up 62kt; Average daily offtake volume in one major terminal was around 4,000-4,500 tons by truck. Taicang 98kt, down 14kt. Average daily offtake volumes in two major terminals were about 7,000-7,500 tons; Jiangyin&Changzhou 121kt, up 10kt.

Port inventory increased recently with cargos from South China arriving in East China. Floating inventory in East China was around 150kt. Coupled deep-sea cargo to arrive, MEG port inventory is expected to increase further in early November.

Discharges in East China improved slightly and some South China cargoes were reallocated into East China markets. However, the supplement from South China could not sustain due to maintenances of CSPC I, FREP, and Sinochem Quanzhou in November-December. Meanwhile, it will also take a longer period for vessels to go back after the congestion. There would be less cargoes to arrive in mid-Nov and some ships would be delayed to Dec. It is still uncertain for effective discharges in East China ports considering the visibility and heavy wind in the fourth quarter.

MEG prices were volatile previously, tracking the trend in coal prices. Looking ahead, focus is likely to gradually return to fundamentals. Supply-demand structure in Nov-Dec would be broadly balanced, with limited inventory buildup. Meanwhile, with easing restrictions in power usage, polyester polymerization rate has gradually recovered to around 84%. Demand for MEG is gradually improving compared with in Sep. Eyes could rest on polyester sales ratio.