China's Jan-May MEG imports down 27 pct year on year

According to China Customs, China imported 504kt MEG in May 2023, up 7.6kt or 17.76% month on month, but down 4.8kt or 8.7% year on year. In the first five months, MEG imports totaled 247kt, down 90kt or 26.71% from the same period last year.

China's MEG imports in Jan-May of 2022 and 2023:

China's July MEG import volume is estimated at 620kt. 

North American Market: Since the end of March, local ethane prices have remained stable, fluctuating slightly around 20 cents/gallon. The low cost of ethane has provided favorable production profits for local chemical products. However, starting from late June, MEGLobal's 750kt/year unit experienced an outage, which is expected to continue until early July. During this period, the North American market may experience some supply constraints. Additionally, the price spread between the United States and China is no longer conducive to arbitrage opportunities. We should monitor the subsequent export situation of US goods. For now, we estimate that starting from July, imports from the United States will be around 80-100kt.

In Europe, demand remains subdued, with some recovery in Turkish demand. However, with the normal operation of two Kuwaiti units and the incremental capacity from the BOCC plant, European countries have reduced their spot purchases of MEG.

Regarding Saudi Arabia, as the units that underwent maintenance in the first quarter resumed operations, we haven't heard of any planned maintenance for the remaining local units. However, some high-cost units have reduced their operating rates, with Sharq operating at around 80%. Overall, Saudi Arabia suffered a significant loss in MEG production in the first quarter, and local shipping volume is expected to decline to 260-270kt tons per month. Consequently, a mainstream supplier has increased its spot market purchases. Looking at June, there haven't been any significant increases in Saudi shipping volume. We estimate the average monthly volume for June to be around 270-280kt. However, starting from July, considering the high overall operating rates of the units and the expected increase in supply, local shipping volume is expected to increase in the second half of the year. 

In Taiwan, in late March, Nan Ya switched operations among its production lines. Line 1 (360kta) restarted on March 21, Line 3 (360kta) stopped on March 22, and Line 2 (360kta) stopped at the end of March. Currently, Line 1 in Nan Ya operates at around 80%, while Lines 2, 3, and 4 are all stopped, with restart dates yet to be determined. Currently, all production units in Taiwan focus on meeting domestic demand, with no plans for exports. We have heard intentions to restart Line 3 at Nan Ya, but based on the current ethylene contract prices, the conditions for restart have not been met. 

In the Korean market, Lotte's 300kt/year MEG unit (Line 1) has been shut down since mid-March, and the restart date is still uncertain. Hanwha Total's 120kt/year unit has restarted and will be able to supply a moderate amount in June. LG Daesan's 125kt/year unit has been shut down for a month since May 20. KPIC's 185kt/year MEG unit is operating and can supply a small quantity. Lotte Yeosu's two units, with capacities of 120kta and 160kta, are currently operating at 90-100% capacity. In the Korean MEG market, where ethylene glycol units have long faced cost competition pressure, local operating rates are low, but there are still reports of some plants having MEG inventory and export demand. Additionally, PTT's 400,000-ton unit in Thailand has been shut down since early to mid-February, with the original plan for restart in June, but there is still no definite news on the restart.

Regarding Iran and Kuwait, in June, Iran's shipments are expected to continue to increase. In late May, two vessels were negotiated for delivery, with volumes of 16kt and 26kt, expected to arrive in the market around late June. In addition, Farsa and BCCO continue to supply goods normally. In early June, cargoes have been arranged for loading, with volumes of 27kt and 18kt, expected to arrive around the end of June. It is estimated that the unloading volume of Iranian goods in June will be slightly above 80kt, and we will monitor the actual progress of unloading. In early June, there were three Iranian cargo tenders, with a total volume of around 50kt. Gradually, loading arrangements will be made from mid-June, and the estimated arrival time will be in early to mid-July. We will pay attention to whether there are any tenders next week. As for Kuwait, they have maintained a low-volume contracted supply from March to May, and the units are currently operating smoothly.