We have already mentioned volatility as an element that will be linked to the MEG market in the coming months. The balanced supply-demand situation makes that any surge in demand or supply disruption, automatically generate rapid movements in the MEG prices. Those have reached in 2017 high levels and healthy margins, which are expected to continue as a starting point in 2018.
Supply reliability will be needed to meet the continued strong demand driven by the start-up of new Chinese plants and the resumption of inactive textile plants in China. The availability of ethane and the correct start of the new Chinese coal-MEG units are important aspects to consider. The instability of downstream PET in the US and Europe is shifting MEG markets overnight, from tight to over-supplied. Imports of PET into these regions are also changing the MEG trade flows needed to re-balance the areas.
The cocktail is ready …. Strong final and industrial demand from polyester and PET industry. High volatility. Relatively high MEG values and healthy margins. Reliable offer? Unstable behaviour of PET and its impact on MEG regional balances.
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