January-May MEG Imports Increase by 4.5%: Is There More Room for Growth?

From January to May of 2024, China's MEG imports amounted to approximately 2,581 kt, marking an increase of 110 kt compared to the same period last year, representing a 4.5% rise. The increase primarily came from Iran, the United States, and South Korea, while imports from Saudi Arabia decreased by about 19%.

Import Breakdown

- Iran: Despite Pars Glycol halting operations in mid-March, contract deliveries were maintained through April, with suspensions starting in May. Thus, Iranian supply remained stable, with some months seeing around 100kt arriving.

- United States: Last year's severe winter storm caused widespread shutdowns, reducing supply. This year, supply has been more stable.

- Saudi Arabia: The reduction was due to local production cuts at the end of 2023 caused by raw material supply issues and the Red Sea incident affecting shipments from the Yanbu region.

Comparison of MEG Imports from January to May, 2024

June Outlook

June MEG arrivals at East China main ports are expected to be considerable, estimated at around 460-470kt. Additional steady arrivals at secondary ports are expected to bring total monthly imports to approximately 630-650kt.

Q3 Forecast

MEG imports are expected to be stable, with fewer arrivals in early July. From late July, imports will increase with shipments from Canada and the United States. However, typhoon season in July and August may delay some shipments, pushing them to August. Overall, Q3 imports are projected to average around 600kt per month, with no significant increase anticipated in the short term.

Key Factors for Q4

1. Restart and Stable Operations of Key Plants:

- Nan Ya's 828kt/year MEG plant in the US has restarted after being idle since December 2023, but rising North American ethylene prices may impact its stable operation.

- Monitoring the progress of Pars Glycol's restart, initially planned for 2-3 months of downtime since March.

- Assessing the effective restart of PRefChem's plant.

2. Changes in Operating Rates of Existing Plants:

- MEG units are operating well, with stable supplies from Saudi Arabia and Canada. The naphtha-to-MEG price spread and absolute MEG prices keep production enthusiasm high. Further monitoring of operating rate changes in existing units is needed.

3. Adjustments in Regional Supplies:

- Watch for demand changes in the European and Southeast Asian markets. European demand has been declining since the end of Q1, causing some US shipments to return to the Chinese market. In April and May, imports from US reached 60-80 kt. Future adjustments will depend on overseas demand and supply shifts between regions.