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Insight | Time: Jul 1 2022 8:40AM  Editor:Michael Zhao
MEG inventory decrease slows down on polyester output reduction
 
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China domestic MEG output continues decreasing due to low prices. Operating rate of all MEG units in China has decreased to around 53% and of coal-based units around 45%.

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More coal-based producers choose to shut down units for maintenance due to falling MEG prices but firmer costs. Operating rate of coal-based units would keep decreasing by around 4-5% and coal-based MEG output is estimated at 350-360kt in July.


Compnay
Location
Capacity,kt/yr
Turnaround (plan)
Zhongke
Guangdong
500
15-day t/a since late Jun
Sinochem Quanzhou
Fujian
500
to cut O/R by 15-20% in Jul
Yangmei Shouyang
Shanxi
200
t/a Jun 29, 20-30 days
HNEC Puyang
Henan
200
t/a Jun 30, restart undecided
CNSG Hongsifang
Anhui
300
t/a Jul 5, 25 days
Xinhang Energy
Inner Mongolia
400
t/a late Aug, 20 days
Sanning
Hubei
600
Jun t/a delayed to Aug-Sep
Guanghui
Xingjiang
400
t/a plan in Aug-Sep, not finally decided
Weihe Binzhou Chemical
Shaanxi
300
t/a plan in Aug-Sep, not finally decided
Yanchang
Shaanxi
100
t/a plan in Aug, not finally decided


Looking ahead, coal prices are expected to keep firm. Eyes could rest on whether some producers in non-coal production provinces would shut units for maintenance.


MEG demand also weakens as some polyester plants choose to cut production on higher product inventories without improvement in sales ratio. 


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The average polyester polymerization rate is expected to slip by around 3 percentage points in Jul (with monthly level at 81% pessimistically).

 

Total MEG inventory in July-August is estimated to decrease by around 100kt, less than the previous estimation of around 150kt.

 

MEG offtake in ports will slow down with decreasing polyester polymerization rate. Coupled with congestion in port areas amid tight remaining tank space, the decrease in MEG port inventory will be slow.

 




[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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