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MEG inventory decrease slows down on polyester output reduction

2022-07-22 08:19:34 CCFGroup

China domestic MEG output continues decreasing due to low prices. Operating rate of all MEG units in China has decreased to around 53% and of coal-based units around 45%.

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More coal-based producers choose to shut down units for maintenance due to falling MEG prices but firmer costs. Operating rate of coal-based units would keep decreasing by around 4-5% and coal-based MEG output is estimated at 350-360kt in July.

Compnay	Location	Capacity,kt/yr	Turnaround (plan)
Zhongke	Guangdong	500	15-day t/a since late Jun
Sinochem Quanzhou	Fujian	500	to cut O/R by 15-20% in Jul
Yangmei Shouyang	Shanxi	200	t/a Jun 29, 20-30 days
HNEC Puyang	Henan	200	t/a Jun 30, restart undecided
CNSG Hongsifang	Anhui	300	t/a Jul 5, 25 days
Xinhang Energy	Inner Mongolia	400	t/a late Aug, 20 days
Sanning	Hubei	600	Jun t/a delayed to Aug-Sep
Guanghui	Xingjiang	400	t/a plan in Aug-Sep, not finally decided
Weihe Binzhou Chemical	Shaanxi	300	t/a plan in Aug-Sep, not finally decided
Yanchang	Shaanxi	100	t/a plan in Aug, not finally decided

Looking ahead, coal prices are expected to keep firm. Eyes could rest on whether some producers in non-coal production provinces would shut units for maintenance.

MEG demand also weakens as some polyester plants choose to cut production on higher product inventories without improvement in sales ratio.

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The average polyester polymerization rate is expected to slip by around 3 percentage points in Jul (with monthly level at 81% pessimistically).

Total MEG inventory in July-August is estimated to decrease by around 100kt, less than the previous estimation of around 150kt.

MEG offtake in ports will slow down with decreasing polyester polymerization rate. Coupled with congestion in port areas amid tight remaining tank space, the decrease in MEG port inventory will be slow.

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