When will MEG Give Better Performance?

In February, the overall market of the polyester industry chain slowed down in China, but MEG fell more, which reached a total of 5.43 percent decline within a month. See from the overall trends of MEG, the decline was mainly concentrated in the beginning of this month, while the price of MEG was around 8,200 Yuan/ton in late April. Therefore, when would be improved for MEG?

Now we analyzed from two factors, including the costs and demands. The details were as follows:

In the aspects of the costs, the ethylene price continued to rise in the upstream market. In February, the Asian ethylene CFR price rose to 1,305 U.S. dollars/ton, an increase of 9.57%. As long as the ethylene price rose sharply, and the profits of MEG manufacturers were being squeezed. At present, the profits of MEG had dropped back to 50-70 U.S. dollars/ton, which made MEG under many pressures. However, the ethylene price had no going to be stopped rising steps. With the expensive crude oil prices and nervous ethylene supply, this caused the traders to improve the quotation. In addition, the naphtha prices went strong and improved the cracking costs, so that the ethylene price would continue to keep strong in recent period. While the ethylene price was going to be strong, it made the cost pressure of MEG manufacturers stronger than before. With the increased pressures of the MEG factory and the device might be cut down.

In the aspects of demands, PTA and MEG as the raw materials, although the prices of them, chips and polyester products etc. were in a weak position in the polyester industry chain, while see from the prices fell in February, the prices of raw materials fall were far less than the falls of polyester products. In this way, the polyester enterprises endured high costs, and the profits of production declined. According to the date of February, the production of polyester filament FDY and POY was closed to the costs, and the profits of DTY and polyester staple fiber began to drop slightly, but there were still the space of profits. However, the gliding profits of the polyester products must limit the enterprises to the procurement of the raw materials and then consume mainly the inventories.

The trading atmosphere of the polyester market was improved in the March, especially in the market of polyester yarn, not only was the purchasing intensions of POY rebounded, but also the preferential ranges had also narrowed in some factories. It could be seen that the downstream market was waiting for the arrival of the rigid preparation demands. While faced with the pressures of capital and inventory, the phenomenon of the downstream centralized purchase was failure to follow up, which led to the prices of the polyester products steady and no advance.

Generally speaking, along with the ethylene price high in the market and made the costs of MEG strong, which was the main factors for controlling the falls of MEG. While see from the demands, although the polyester market was sluggish at present, with the approach of the rigid purchasing cycles in the market, and MEG market would be improved step by step.