Syngas-based MEG supply to decrease in August-September

Since late July, with Yankuang Rongxin and Woneng undergoing maintenance, the operating rate for syngas-based MEG has significantly decreased. As of July 25, the rate had dropped to 68.17%, a 5.31% decline from the previous period. This week, Hongsifang halted operations for maintenance, Yangmei experienced a temporary shutdown, and Yulin Chemical reduced its rate due to equipment issues, bringing the syngas-based MEG load to below 50%.

Specifically, Hongsifang's maintenance was mentioned as early as June but was postponed due to favorable MEG profitability. They plan a short-term shutdown followed by operating at 30% rate for five days before returning to normal levels. Yangmei temporarily shut down on July 29 due to equipment issues and is expected to restart soon. Meijin is replacing catalysts on two production lines, reducing the rate to 50% from August 1 for about two months. Yulin Chemical has reduced its rate to around 30% and is expected to resume normal operations shortly.

In August and September, maintenance activities will concentrate on syngas-based chemical plants, leading to a contraction in syngas-based MEG supply. Some uncertainties remain, such as maintenance plans for two units in HNEC Yongcheng, Henan, and potential reactivation plans for HNEC Puyang. The successful reactivation of Guanghui's two production lines is also uncertain.

Considering the maintenance in Yongcheng in early August, Puyang's restart at the end of August, and the potential single-line operation of Guanghui, the syngas-based MEG rate could temporarily recover to around 68-69% by mid-August as Hongsifang, Yankuang, Guanghui, and Woneng resume operations. However, this could be followed by a decline to around 60% as Jianyuan shuts down for maintenance, Sanning switches to ammonia production, Tongliao plans maintenance for late August or early September, and a factory in Xinjiang also schedules maintenance around the end of August. If all goes according to plan, the rate could fluctuate between 60-69% before rising above 70% as maintenance concludes.

This year, syngas-based MEG has been relatively profitable, encouraging high operational rates across coal chemical plants. However, prolonged high-rate operations have increased the frequency of unexpected issues, as seen recently with Yangmei Shouyang, Yulin Chemical, Hongsifang, and Jianyuan.

Looking to the fourth quarter, most plants have completed maintenance in the first three quarters, with no new maintenance plans currently announced. Attention will be on whether Tianye plans any maintenance. The operational rates for syngas-based MEG are expected to remain high, though unexpected issues may still occur, requiring adjustments to production forecasts to account for potential losses.