MEG Market Is Hard To Get Busy

After Spring Festival, MEG Market showed a short strong tendency in China. However, with the arrival of MEG cargos, the inventories increased greatly. As more and more tanks used to save MEG, the dealers have had to decrease the prices of MEG in order to sell the surplus goods. The present quotation of MEG is around 8300 Yuan/ton in China and the foreign quotations are around 1080 dollars/ton.

In 2011, the import volume of MEG kept surging and created new high in August and September. Judged from the whole year of last year, total import volume reached 7.27 million ton, which increased 9.4% compared with the volume in 2010. The import volume in last December increased 9.3% to 74.21 month-on-month. According to some statistics, domestic output of MEG was about 0.25 million ton in China last year while the polyester load in the downstream market was 87% and the production of polyester was around 27 million ton. Therefore, it can be calculated that about 0.76 million tons of MEG is required for polyester production every month. This figure is far more than the actual output of MEG. This is the reason why the price of MEG turned green as soon as the Festival was over.

By now, the operating rates of weaving factories have turned back to the normal level, but their demand for raw materials was still weak as the orders were still inadequate. Therefore, the inventories of polyester factories were still in large quantities and the production-marketing in the whole textile market was still dull. According to a survey, the production-marketing of polyester manufacturers was only about 60-80% last week and the demand in MEG market has not recovered yet. The prices of polyester products were still in consolidation due to high cost of its upstream feedstocks, PTA. The polyester manufacturers are still wait-and-see and do not make actual decrease in prices. They are still waiting for the busy season in fabrics market.

As for the fabrics market, the atmosphere was so quiet because the sales kept bad and the orders were in shortage after the Spring Festival. Although some fabrics are selling well in recent times, the busy season of the fabrics market has not come yet.

In conclusion, the decrease in MEG prices is caused by over-supply and huge inventories of suppliers. If the demand in downstream market turned better, the supply problem is going to be solved easily. However, the recent downstream market is still mild, so there is still a long time for MEG market to turn prosperous.