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Insight | Time: Dec 1 2022 8:44AM  Editor:Michael Zhao
MEG market to remain weak on oversupply
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Shanmei Group Yulin Chemical is now running its three syngas-based MEG units at full capacity and is expected to remain at 100%. The three units has total capacity of 1.8 million mt/year. With Yulin Chemical reaching commercial production, output of coal-based MEG in China stood above 10,000 tons per day again. According to CCFGroup, coal-based MEG capacity in China will be adjusted to 10.45 million mt/year. In December, operating rate of coal-based MEG units will increase to around 40%, and further increase is expected with falling coal prices.


For naphtha integrated production, Shenghong Petrochemical has achieved on-spec ethylene and plans to start 1 million mt/year MEG unit in early December. Coupled with delayed maintenances of CSPC & ZRCC, and the ethylene diversion due to slow EO sales, MEG supply will keep ample.


In demand side, polyester polymerization rate has decreased to around 74% and the Dec average rate is expected to be around 71% due to high inventory and production losses. In the following three months, MEG oversupply will be fierce, and the surplus might reach 700kt. Eyes could rest on the stability of Yulin Chemical and Shenghong Petrochemical. MEG port inventory is expected to stand at about 1 million tons with the arrivals of contract cargoes in H1 Dec.


MEG prices are expected fluctuated down given the oversupply, open interest structure in futures market and the ultra-low prices.

[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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