Asia monoethylene glycol prices hit six-month high on upcoming holidays, plant turnarounds – Asia monoethylene glycol prices - Arhive

Asian monoethylene glycol prices prices hit a six-month high of $898/mt CFR China Friday afternoon, with margins flipping to a positive of $10/mt.

The last time the MEG CFR China marker was assessed at $898/mt was on February 16 this year.

The sudden spike in MEG prices this week surprised market participants, as downstream polyester demand is generally stable and its high demand season has waned as it typically runs from April to June.

One of the reasons cited for the price spike was end-users such as polyester manufacturers heard to be stockpiling MEG cargoes for September as China will be off for its Golden Week holiday starting October 1.

Another factor that could have influenced prices was the delay in the start up of India’s Reliance new 750,000 mt/year MEG plant in Jamnagar, Gujarat, to the first week of September. S&P Global Platts had reported earlier the plant would start up in August.

According to sources, this piece of news was enough to push up prices by about $18/mt on the day to $898/mt CFR China this Friday.

Plant turnarounds in the region were also cited by sources, such as major producer Taiwan’s Nan Ya Plastics. It plans to shut its 720,000 mt/year No. 4 monoethylene glycol plant in Mailiao at the end of August for maintenance and will only restart at the end of September. In the US, as Hurricane Harvey barreled towards the Texas coast, Formosa Plastic shut its petrochemical complex in Point Comfort, Texas.

The site, which is about 90 miles northeast of Corpus Christi, includes two steam crackers with a combined ethylene capacity of just under 1.5 million mt/year and also includes capacities for MEG (300,000 mt/year).

Others include Saudi Arabia’s Eastern Petrochemical Co., better known as Sharq, which plans to take its 700,000 mt/year No. 4 monoethylene glycol plant at al-Jubail offline in October or November.

Sharq had yet to decide on the exact month for the shutdown as it wanted to monitor the prices.

Surging production costs due to feedstock ethylene, which hovered around the $1,280/mt CFR China mark this week according to S&P Global Platts data, was one of the reasons market sources cited for the sudden price rise.

The MEG production margin is calculated as the CFR China MEG price minus production costs. The production cost is calculated by multiplying the CFR Northeast Asia ethylene price by a conversion factor of 0.6 and adding $120/mt for production.

Traders said active trading on the futures market in anticipation of further price rises had offset the rise in MEG prices, and market sentiment was likely to remain bullish to the end of the year.

–Karen Ng, karen.ng@spglobal.com
–Edited by Jeremy Lovell, jeremy.lovell@spglobal.com