MEG rebounds on falling port inventory

MEG futures for January 2023 delivery in Dalian Commodity Exchange closed at 4,314yhuan/mt Monday, September 5, 2022, up 221yuan/mt or 5.40% higher than the previous settlement. Spot MEG price also increased today with spot prices talked around 4,185-4,195yuan/mt and H2 Oct goods at 4,245-4,250yuan/mt in the afternoon.

The rise was mainly buoyed by the decrease in MEG port inventory and the increase in polyester polymerization rate. 

MEG inventory in East China ports decreased since late Aug with less cargo arrival. Coupled with the impact of typhoon recently, the figure kept going down.

MEG tank inventory in East China main ports decreased by 100kt week on week to 968kt on Sep 2. Tank inventory in Ningbo decreased by 16kt to 49kt. Offtake volume in one major terminal of Ningbo was around 2,000 tons per day in Aug 29-Sep 1. Inventory in Shanghai&Changshu down 10kt to 47kt; Zhangjiagang 651kt, down 39kt; Average daily offtake volume in one major terminal was around 8,500-9,000 tons by truck. Taicang 100kt, down 28kt. Average daily offtake volumes in two major terminals were about 6,500 tons; Jiangyin&Changzhou 121kt, down 7kt.

In demand side, polyester plant operating rate has recovered to around 84% last Friday and is expected to increase further with easing power restrictions and in anticipations of improving end-use demand.

In short term, MEG market is likely to keep firm. However, considering the high level of total MEG inventory, whether the uptrend could sustain still depends on further improvement in demand.