Impact of the US cold snap on MEG supply to China

Some MEG plants in the US were shut down last Friday as power facilities were closed due to the extremely cold weather, including Lotte, MEGlobal, Sasol, Indorama and Shell. The restart depends on the recovery of power facilities. 

The power facilities might be restored gradually around the end of this week, and if there is no substantial damage to the MEG plants, restart can be arranged gradually, and we will pay attention to the actual situation of the plant at that time.

Large capacity has been affected by the blizzard but the direct impact of supply to China is limited. US MEG exports to China apparently increased in June-September with average supply around 80kt per months. Those cargoes have been gradually arrived in China in end-August to mid-December. Overall supply in the US has decreased a lot with the inventory consumption, shutdown of Nan Ya and operating rate cut of several units. US MEG export to China in November has been quite low, estimated at 20-30kt. 

However, the indirect impact of the cold wave still exists. According to the January-September U.S. export data, 25% of the total exports were delivered to the Chinese market, 42% of the volume to Turkey, Belgium and Italy, 23% to Mexico and Brazil. 

Under the influence of the cold wave, the local logistics conditions in North America are insufficient, and some of the cargoes originally planned to be shipped to Europe have been delayed. In addition, the production loss due to the cold wave  to the European market will be supplied from other regions.  China's MEG price is now the lowest across the globe, so suppliers are more likely to reallocate MEG supplies to European and other markets.