A brief analysis of MEG market before and after the Spring Festival

Over the past five years, MEG prices have tended to rise more than fall in the run-up to the Spring Festival, often seeing a year-end price boost. So far in 2025, the price trend has been similar. After the holiday, however, the price trend has historically been mixed-some years up, some years down.

Since early 2025, domestic MEG prices have generally ranged from 4,700 to 4,850 yuan/mt, with solid support at the lower end. In the period leading up to early January, the primary market driver was port inventories.

At the end of December and beginning of January, visible MEG inventories fell significantly, with Zhangjiagang hitting a record low. This drop buoyed prices, but starting last week, visible inventories rebounded markedly. Coupled with a concentrated influx of cargoes (both domestic and imported) in January, MEG prices came under pressure. They rebounded again, however, supported by the delayed restart of ZRCC in East China and abnormal indicators for some imported cargoes.

From this week onward, the market's key drivers have shifted, and prices have firmed upward. On one hand, a new round of U.S. sanctions on Russian crude, combined with the eighth consecutive weekly draw in U.S. crude oil inventories (as reported by the EIA), has kept oil prices strong, providing clear cost support for MEG. On the other hand, polyester-sector demand remains reasonably healthy. Compared with previous years, polyester product inventories are low, leading to relatively staggered plant maintenance before and after the holiday. In January and February, average monthly operating rates for polyester are projected at around 84% and near 87%, respectively. Some factories still need to restock before the holiday, and with low port inventories, traders are enthusiastic about buying at lower prices-further bolstering MEG prices.

That said, the possibility of rising MEG inventories in January and February-along with typical seasonal stock builds-should not be ignored. During the second half of January, large volumes of MEG cargoes are slated to arrive at major ports, while scheduled polyester plant shutdowns will gradually take effect. As a result, visible MEG inventories are expected to continue climbing; port stocks may reach around 650kt before the Spring Festival, with further increases likely afterward. Later on, port supply constraints should ease noticeably. Recently, selling sentiment has grown, and spot price differentials have weakened.

From a supply-demand perspective, polyester plant maintenance over the holiday will likely trigger a seasonal stock build of around 350kt in January and February. However, following last year's significant destocking, this normal seasonal buildup may not be enough to dramatically drive down MEG's valuation. If polyester operating rates recover as expected after the Spring Festival, market sentiment for MEG should remain upbeat, potentially returning to a destocking cycle in March. Going forward, pay close attention to the restart progress of existing facilities (e.g., Xinrun, Sinopec Shanghai, Zhenhai) and the performance of new facilitiy (Zhengdakai).

Monthly MEG supply & demand balance (10kt)