Member ID:
Stay logged in for 30 days
Forget Your Password?

login CCFGroup App

Insight | Time: Mar 20 2019 1:37PM
MEG spot availability still in surplus
Text size
MEG market remained weak recently with prompt price down below 5,100yuanmt again.Enquiries for prompt and late March materials were moderate, and some traders in short of contract supply were active to buy. Buying interests for prompt materials boosted by news of VAT cut, however, the momentum failed to last for a long period. Prompt prices slipped as selling was still active at high level due to ample availability.

In fundamentals, MEG supply and demand structure is expected to be broadly balanced in April and May. However, the weakness is mainly caused by high inventory and surplus spot availability. According to CCFGroup, MEG inventories in all sectors increased by about 550kt in January-February. The current inventory level is more than doubled compared with the level in early 2018. MEG inventory/consumption ratio increased rapidly with the rise in total inventory.

The ratio increased to about 53 days by end February, due to polyester output reduction during Chinese New Year holidays. While the ratio has not decreased apparently despite recovery in operating rate of polyester plants. MEG inventoryconsumption ratio is expected to maintain at about 45 days in April-May, apparently higher than average level in the past three years. 

In terms of inventory structure, proportion of port inventory increased notably, reaching 57% by end February. Polyester plants mainly took contract goods recently, and the demand for spot materials was moderate.

MEG inventory structure: proportion in East China main ports increased

In demand side, operating rate of polyester plants stood higher than 90%. However, buying from end-users was moderate. Polyester product cash flows were good while sales ratio was modest. Polyester product inventories increased slowly amid weak sales. It's uncertain whether polymerization rate would be higher than expected amid improving cash flows.

Related Articles
MEG market daily (Jul 18, 2019)
MEG USD market inches up
DCE MEG futures for Sep closes 0.88% higher
MEG RMB market inches up
MEG tank inventory in East China Main Ports (Jul 18, 2019)
MEG USD market shivers slightly
MEG RMB market changes little
MEG market daily (Jul 17, 2019)
MEG USD market edges up
MEG RMB market remains firm
Operation of China's textile and clothing companies in 2018
Research: Analysis on China methanol industry chain
Rayon yarn market change on vortex-spun yarn operation
Development of nylon downstream sectors
Polyester supply and demand change in 2019 and outlook ...
Polyester and end-user market demand in 2019