How cost pressure catapulted China’s Monoethylene Glycol prices

Mono Ethylene Glycol price showed a marginal increment in March owing to the high raw material ethylene value. Following the increment in the first half of the month, the prices for MEG submerged in the second half on the back of sluggish demand from the downstream polyester industry. Increasing cost pressure from incessantly rising energy feedstocks has further resulted in a rebound in Monoethylene glycol prices in China. Thus, the overall price for Monoethylene glycol saw an upward movement and hovered at USD 875 FOB Shanghai (China).

Mono ethylene glycol prices are majorly influenced by the feedstock Ethylene and ethylene oxide market. In H1 of March, ethylene glycol market showed an overall upward price trend in Asia due to the tight availability of the product in the region amidst surged market interest. As a result of high demand from the downstream polyethylene terephthalate (PET) resin, polyester fibres and film, and engine coolants industries, ethylene glycol prices have skyrocketed.

Whereas in H2 of March, the price of ethylene glycol dropped with a sharp decline in the crude oil values. The demand has also fallen causing producers to alter production rates. Therefore, the major producer of MEG Taiwan Nanya's with 720 metric TPA has shut down its plant for maintenance. Later, in China Guanghui started up its new MEG plant at the end of this month with a capacity of 400metric tons along with that Shanxi Meijin has also operated with low production rate.

In addition, China also imports MEG from Middle East Asian countries, MEG prices have been hampered due to the current resurgence of covid in the Chinese market, restricting the supply of the product in the domestic market. Thus, with fluctuating crude prices throughout March, refineries using crude to produce feed have come under pressure from rising feedstock prices, causing Ethylene glycol prices to rise and settle at USD 725 FOB US Gulf (USA).

As per the ChemAnalyst database, the prices of mono ethylene glycol are expected to decline with smoothening of crude value. Also, with 20% reduction in the operating rates at Fujian on the back of diminished demand may rebalance the market dynamics in the upcoming month.