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Insight | Time: Nov 29 2022 8:45AM  Editor:Michael Zhao
China's MEG recedes on rising inventory and lower coal prices
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MEG market receded sharply with thin discussions. Production costs decreased recently with falling coal prices and market sentiment was weighed by rising port inventory. In CFR China market, discussions were mainly at $440-445/mt.

Higher port inventory

MEG tank inventory in East China main ports increased by 70kt week on week to 920kt on Nov 28. Tank inventory in Ningbo increased by 5kt to 55kt. Offtake volume in one major terminal of Ningbo was around 3,000 tons per day in Nov 21-27. Inventory in Shanghai&Changshu up 4kt to 87kt; Zhangjiagang up 21kt to 462kt; Average daily offtake volume in one major terminal was around 4,000-4,500 tons by truck. Taicang 188kt, up 34kt. Average daily offtake volumes in two major terminals were about 4,500 tons; Jiangyin&Changzhou up 6kt to 128kt.

Lower coal prices

The cost of coal to MEG has decreased by 300-500yuan/mt in November. According to CCFGroup, price of coal for chemical use in Inner Mongolia has decreased by around 200yuan/mt from early Nov, and price of thermal coal by around 50yuan/mt. In Shanxi and Anhui, the actual delivered price of coal for chemical use and fuel has decreased by around 150-200yuan/mt. The production cost has decreased by around 400-600yuan/mt.


Currently, coal-based MEG producers have not shown intentions to restart units. If coal prices decrease further, some producers may restart their units.


New capacity

Shenghong Petrochemical has started one cracker over last weekend and has achieved on-spec ethylene. The cracker has the capacity to produce 1.1 million mt/year ethylene. The company plans to starts its 1 million mt/year MEG unit in early Dec.


Shanmei Group Yulin Chemical are now running two units with capacity of 600+600kt/year and the daily output has reached around 3,500 tons.



Maintenances of CSPC 400kt/year and ZRCC 800kt/year have been cancelled. The two units originally planned to shut for maintenance in December but without clear timing.

The inventory buildup would accelerate in December. Based on the estimation of 73%, 69% and 70% for polyester polymerization rate in December 2022-February 2023, total MEG inventory is expected to increase by 600-650kt. MEG market will be still weighed by weak supply/demand structure.

[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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