MEG market rebounded recently on favorable fundamentals, despite bearish outlook for the coming months. Our preliminary forecast of MEG capacity growth for 2020 was higher than 50%. According to the current plans, most startups would be concentrated in the third quarter of 2020. However, the actual startups would be possibly delayed.

In the near term, the new capacities include US MEGlobal, Malaysia's PRefChem, China's Yankuang Rongxin, Hengli Petrochemical and Zhejiang Petrochemical. MEGlobal has started its 750kta unit while others are delayed. Hengli might be the only one that could start before the year end.



In December, domestic production is estimated at about 700kt, import around 900kt and polymerization rate around 86%, total MEG inventory is expected to increase by around 100kt. And the increase in port inventory would be slowly.

In January 2020, polyester market would have great uncertainties. Polyester market is expected to weaken. However, polyester output cut or unit shutdown are slower just affected by the weakness in end-user market. The lowest point of polymerization rate in Jan is uncertain.



Currently, MEG port inventory remained low and is expected to keep decreasing with about 220kt cargoes to arrive in East China (including major ports, and some other ports). MEG prices are expected to keep fluctuating or firm slightly.