China MEG Prices Rebounded Due to Multiple Boosters

Preface: MEG prices dropped affected by the soft external environment last week. After the short-term decrease, MEG prices rebounded from RMB 7,320/mt to RMB 7,700/mt this week, backed by the speculation of navigation closure. Currently, there is no final conclusion about navigation closure, yet the speculation interest has boomed.  

The 19th Session of National Congress of the Chinese Communist Party is on the horizon. The security assurance has been strengthened in different regions. In Jiangsu, the Yangtze River Port will be put under supervision from October 11 to October 28. The document hasn’t been issued officially, but there are several requirements. One of the requirements that is related to MEG is as follows. Ships carrying X/Y-series bulk chemicals cannot navigate on the Yangtze River in Jiangsu or load/unload at the Yangtze River Port.

MEG belongs to Y-series product, thus, MEG import ships cannot navigate on the Yangtze River in Jiangsu or load/unload at the Yangtze River Port from October 11 to October 28. The MEG transportation will be restricted greatly.

Affected by the navigation closure issue, players in the MEG market were eager to raise prices. The buying appetite in the China market boomed. Besides, there was stockpiling demand for the National Day holiday and the Mid-autumn Day festival. Downstream PET manufacturers stocked up actively. Traders also held prices firm. In the USD market, prices of shiploads to be delivered in the short term rose sharply, while the supply of forward resources was extremely tight.

The navigation closure issue has caused other bullish factors as well. The overall MEG inventory in East China is likely to be insufficient. Combined with the high buying interest before the “Two Holidays”, MEG prices are predicted to increase further. SCI will continue paying attention to the influence of the navigation closure.