MEG increases on higher oil prices

China domestic MEG prices increased apparently on higher costs lifted by rising crude oil prices during the holiday. Deals for spot goods were around 4,410-4,460yuan/mt, and deals were mainly among suppliers. Bids/offers for CFR China cargoes were thin during the weekend.

MEG tank inventory in East China main ports increased by 66kt from Sep 26 to 888kt on Oct 8. Tank inventory in Ningbo decreased by 4kt to 56kt. Offtake volume in one major terminal of Ningbo was around 3,500 tons per day in Sep 26-Oct 7. Inventory in Shanghai&Changshu up 34kt to 72kt; Zhangjiagang unchanged at 536kt; Average daily offtake volume in one major terminal was around 9,000-9,500 tons by truck. Taicang 98kt, up 33kt. Average daily offtake volumes in two major terminals were about 3,500-4,000 tons; Jiangyin&Changzhou up 3kt to 126kt. 

About 40kt MEG cargoes are scheduled to arrive in East China ports in Oct 8-9 and 135kt in Oct 10-16.

On Oct 8, operating rate of all MEG plants in Chinese Mainland increased by 2.44% from Sep 29 to 53.52% and of coal-based MEG plants in Chinese Mainland increased by 3.47% to 32.72%. 

In fundamentals, MEG supply recovers slowly and total MEG inventory would see around 100kt decrease in October. The market would be broadly balanced in the fourth quarter. The market could still find supports before Yulin Chemical reaching commercial production at its 600kt/year #1 MEG unit in Shaanxi province. In short term, MEG prices would keep firm on rising crude oil prices in early October.