China's MEG Inventory Hitting Record Low

China's MEG Inventory Hitting Record Low

MEG inventory hits two-year low in Changjiang International

Inventory in Changjiang International, a major terminal for spot MEG, has maintained around 200-210kt for about a week.

This is nearly the lowest level in two years. While in downstream, operating rate of polyester plants was around 91.2%, and average level was anticipated at 87% for January.

Demand for MEG from polyester sector remained firm. Spot MEG inventories in polyester increased to about 12 days, but which was still considered as a rational level. Polyester plants may still purchase feedstock prior to Chinese Lunar New Year around mid-February.

Inventory in Changjiang International is likely to keep low in January, and is expected to ease in end January or early February with deep-sea cargo arrivals.

Healthy fundamentals with improving indicators in polyester chain

Average sales ratio was around 140% in the week after the long weekend for January 1. More end-users purchased amid concerns of continuous rise in feedstock prices.

While purchase volumes were mixed on concerns of weakening demand and upcoming shutdowns during the holiday.

In general, product inventories decreased slightly, with the average level for POY, FDY, and DTY at 4 days, 7.4 days, and 17 days, respectively.

In general, firmer chemicals prices lent some support to MEG market sentiment. Traders in short of contract supply were also active to cover shorts.

Coupled with the port restriction and incident, MEG market is likely to keep its strong momentum.