MEG inventory to decrease in Q2
MEG tank inventory in East China main ports decreased by 45kt week on week to 1,047kt on Feb 13. Tank inventory in Ningbo decreased by 20kt to 110kt. Offtake volume in one major terminal of Ningbo was around 4,000 tons per day in Feb 6-12. Inventory in Shanghai&Changshu down 6kt to 122kt; Zhangjiagang up 10kt to 493kt; Average daily offtake volume in one major terminal was around 3,500-4,000 tons by truck. Taicang 189kt, down 27kt. Average daily offtake volumes in two major terminals were about 7,000 tons; Jiangyin&Changzhou down 2kt to 133kt.
The decrease in MEG port inventory was mainly due to the output cut and full tanks. ZPC, Yulin Chemical lowered operating rate and Satellite Petrochemical delayed the restart of one MEG unit. Meanwhile, tanks in Ningbo and Taicang were nearly full. Offtake in ports was active but the time difference between cargo offtake and discharge led to short term decrease in MEG port inventory.
MEG port inventory is likely to remain rangebound in February. There will be a lot of import cargoes to arrive in the second half of February. And for deep-sea cargo, one ship usually docks at several terminals. In some ports, discharges will be larger than the remaining tank space, which will result in longer time for discharging.
Total MEG inventory has accumulated since December last year. Besides the increase in port inventory, MEG inventory in other sectors, including MEG and polyester plants, also increased. Total MEG inventory is expected to see clear decrease since March in anticipation of improving fundamentals. Currently, MEG inventories are high in polyester plants due to low prices. MEG producers are likely to lower their inventories. Effective decrease in ports will be seen in the second quarter.
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