In congruence with a general global shortage of MEG, North American market was also experiencing a shortage due to the frequent Old World International production issues at its 315ktpa plant at Clear Lake. Currently Shell is also on its 3 weeks turnaround at its 400ktpa plant at Scotford. Further there are turnarounds expected at Dow (284 ktpa) and ME Global (386 ktpa) at Fort Saskatchewan and Seadrift respectively. Luckily PET outages due to tornadoes have reduced MEG downstream demand and with the onset of high season, as these plants come out of their outages, it appears that demand on imported MEG will not let up. with an already depleted international supply situation and the domestic availability a bit jittery, there would be an upward pressure on the price of this feedstock.
For the European market, there has been some movement in terms of purchases volumes of the downstream sector. However, MEG outages by Clariant @ Gendorf, PKN Orlen @ Plock and by BASF @ Ludwigshafen, are exasperating supplies (Note that BASF is an EO supplier which is a feedstock for MEG). Again this shortfall will have to be taken mainly from Middle East, where output has remained restricted due to major plant turnarounds. There has been strengthening of the Euro which would further help in keeping the prices of MEG steady. With this stabilizing effect, and a short supply situation, again an upward price pressure on MEG will be maintained in Europe.
In the North East Asian market there has been some rebound in the demand of the polyester sector which increased the demand-pull on MEG helping price recovery to $1125/ton cfr levels during June from $1080/ton cfr levels during mid April. There has been a rebound in demand chiefly in the Chinese, Korean and Taiwanese markets. Operating rates in the Korea are in 90% region which is indicative of good downstream demand. Further this demand is intrinsically linked to the Chinese market, where downstream operations have also picked up. This is indicated by some output recovery at the Textile City in Shaoxing, China, reaching levels of 5.7 – 5.9 million meters, during Mid June, up from 3.9 million meters/day. Further downstream sales to output ratios have also slowly gone over a 100%. This renewed increase in productivity is a function of a high season, and the restrictive monitory policies are just giving enough impetus to keep the industry moving at a pace strictly driven by supply & demand equilibrium, which could have been prone to overheating if restrictive measures were not put in place.
In Taiwan, FPC #1 olefins unit in Mailiao plant has been down since mid May, as there was fire in the upstream pipelines. This has caused closure of associated Nan Ya's associated MEG plant #1 and plant #2 due to lack of ethylene. Start June, the government agencies demanded a more extensive shutdowns for safety inspections. It is believed that a MOU has been signed which would allow a closure of Nan Ya's # 3 plant by June 15th and the # 4 plant by June 20th. These inspections will probably be conducted well into July
Many plants in Japan were down not too long ago due to power shortages experienced as an aftermath of the earthquakes. Mitsubishi took a turnaround at its facility at Kashima and also the 115 ktpa plant of Maruzen came out of its turnaround at Chiba. These factors have successively contributed to the tightening position of MEG in North East Asia as well as East Asian countries, which has facilitated MEG prices to make a rebound.
