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CHINA MEG MARKET REVIEW

MEG RMB market moved down sharply in the week of Mar 20-24. Overall transactions were moderate as
polyester plant enquired inactively and traders mainly sold nearby and bought forward cargoes. HXCCE
MEG hit limit down for three consecutive days, which heavily weighed on market sentiment. Spot price fell
from more than 6,900yuan/mt to around 6,300, the lowest level since Nov last year. The highest and lowest
traded prices for prompt goods were at 6,900yuan/mt (Mar 20) and 6,290yuan/mt (Mar 23); for H2 Apr were
at 6,920yuan/mt (Mar 20) and 6,280yuan/mt (Mar 24). USD market dropped significantly and
transactions shrank. Foreign traders were inactive to sell this week and only a few polyester plants procured.
CFR China/China domestic MEG spread was at 170-200yuan/mt. The highest and lowest transaction prices were
$813/mt and $750/mt.
Total MEG inventory decreased in Mar, while spot availability was still ample in the market. Consumption was
slow as polyester plants mainly used contract supply. Supply pressure remained as operating rate of domestic
MEG plants recovered to more than 73% by Mar 24. Ample MEG stocks in polyester plants and high product
inventories still weighed on market sentiment.

CHINA MEG MARKET FORECAST
About 140kt MEG cargoes will arrive in China and the inventory in East China main ports is likely to increase,
considering the off-take conditions recently. Spot availability is ample while consumption slows down as
polyester plants mainly use contract supply. In addition, traders also lack confidence. The market is likely to
remain weak in short term.

Mar 27, 2017 14:46
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