October syngas-based MEG production forecast revised downward amid unit issues

At the beginning of October, syngas-based MEG units experienced both maintenance shutdowns and restarts. Guanghui and HNEC Puyang resumed production in early October and are now operating normally. Meanwhile, Xinjiang Tianye and Yuneng Chemical are undergoing planned maintenance. However, Qianxi Coal Chemical and Hongsifang have reduced their operating rates due to unforeseen issues, and the restart times for units at Meijin and Jianyuan have been delayed. As a result, the ramp-up in syngas-based capacity post-National Day has been slower than expected, leading to a significant reduction in projected output for October.

To provide more detail, both Qianxi Coal Chemical and Hongsifang lowered output due to equipment issues. Qianxi Coal Chemical is in the recovery phase, while Hongsifang has no clear timeline for full recovery and is currently operating at low rates. Jianyuan, originally scheduled to restart in early October, has delayed its restart to around October 20, with production expected to resume in November. Meijin, which had also planned to resume operations in early October, has pushed its recovery to November as well. Tongliao Jinneng and Yangmei Shouyang, initially scheduled to resume production during the National Day holiday, have already begun output, with operating rates gradually increasing. Furthermore, CNCEC's unit in Inner Mongolia is still in the start-up phase and has yet to produce output, and Zhongkun has announced a new planned maintenance.

Given these developments, we now estimate that syngas-based MEG production in October will be around 580-590 kt, approximately 50 kt lower than previous expectations.

After the holiday, MEG prices surged rapidly, driven by rising crude oil prices. Although prices have recently retreated slightly, they remain at a high level for the year. In contrast, the coal market experienced a downturn, as colder weather during the National Day holiday led to a drop in electricity consumption across many regions, resulting in sluggish market activity. Some traders began lowering prices to clear inventory, pushing coal prices into a downward trend. The decline in coal costs, combined with the firmness of MEG prices, has driven syngas-based margins back to their highest level this year.

Against this backdrop, we believe the upward trend in syngas-based operating rates remains intact, although the pace has been delayed. Based on the current production schedule, we estimate that syngas-based MEG units will operate at over 70% capacity in November and December, with monthly output expected to exceed 600 kt.