Weak Demand Along with Declining Crude Prices Results in Drop in Monoethylene Glycol Prices

Mono-Ethylene Glycol (MEG) prices dipped after observing a rise during the last week of March due to fluctuating crude oil prices. This drop in energy prices relieved the market prices of all crude derivative products including, Ethylene, and feedstock of Mono-Ethylene Glycol. In addition, due to the current epidemic situation in China, the manufacturers are hamstrung from increasing their prices, seeing the weak demand from downstream packaging and textile industries in the domestic market.

Mono-Ethylene Glycol market dropped following the feedstock ethylene in the second half of this week after the smoothening of natural gas prices in the global market and the sluggish demand from the Asia-Pacific region because of lockdown in China. Ethylene Glycol manufacturers have also reduced their operating load by 3% compared to the beginning of the month. There was a drop in construction by 2% in the downstream polyester industry with insufficient inventories.

China, being a net importer of Ethylene Glycol, has witnessed several curbs in its demand after the extension of the lockdown in Shanghai, disrupting the supply chain. Later, due to the rise in covid cases, China's busiest port in Shanghai was sealed off for almost a week, which caused the companies to halt their production. Thus, the price for Mono-Ethylene Glycol in April settled at USD 869 FOB Shanghai.

In addition, Reliance Industries Limited (RIL) reduced Mono-Ethylene Glycol (MEG) prices in the domestic market of India, seeing the insufficient demand from downstream Textile & packaging industries. Likewise, Indian Oil Corporation Ltd (IOCL) also reduces Mono-Ethylene Glycol (MEG) prices in the domestic market of India after the decline in energy prices. Therefore, the price for Mono-Ethylene Glycol saw a downfall movement this week and settled at INR 69190 Ex-Kandla (India) on April 8.

Furthermore, Taiwan Nanya's Ethylene Glycol plant with 720,000 tons/year has preponed their plant shut down for maintenance purposes that will last for around two months.

As Per ChemAnalyst Analysis, "the price for Mono-Ethylene Glycol is expected to decline following the sluggish demand from downstream packaging and textile industries."