Sep 19, 2023
The MEG supply side appears ample, with August-September domestic supply estimated to remain around 1.48-1.50 million tons. New units are still expected from Shaanxi Yuneng Chemical and Zhongkun in October, while the EO market is weak with integrated plants continuously postponing switching actions. For example, Hengli Petrochemical's planned switch to EO is expected to materialize in October, still depending on progress in commissioning its ethanolamine and DMC units. Meanwhile, limited EO sales due to more northern antifreeze plant shutdowns mean the MEG monthly output loss from switching is only around 20-30kt.
Regarding supply-demand structure, MEG is gradually shifting towards oversupply, with a key watch on Asian Games impacts on polyester operating rates in September-October. Looking ahead to November and December, with expected incremental supply in the MEG production process and concerns about negative feedback in the polyester industry chain, the MEG supply-demand structure will weaken. This could lead to the accumulation of social inventory once again, keeping pressure on the MEG market.