Impact of port inventory on MEG prices weakens

The demand for MEG cargoes in East China ports has apparently weakened with more domestic supply, lagging behind that in MEG producers. Previously, the change in MEG port inventory could apparently reflect the demand and buying sentiment of polyester plant, but this feature has gradually faded away since 2021 with more domestic supply available. Most domestic cargoes are directly shipped to downstream polyester plants, and polyester plants also prefer domestic cargoes on yuan depreciation and considering the import cargo shipping cycle. As a result, the impact of port inventory on MEG price change has also weakened.

In H1 2022, offtake in East China port has remained low and gradually increased in H2 2022 due to contraction in domestic supply on persistent low prices.

As for supply-demand structure, the market could still see decline in total inventory in October. Inventory in MEG producers decreased by around 60-70kt in H1 October. However, MEG port inventory continued accumulating in H1 Oct and would decrease in H2 Oct with less cargo arrivals.