China MEG Market 17 April 2017

China MEG Market Review
MEG market retreated sharply this week on pessimistic sentiment and support from fundamentals was limited. The market remained rangebound in earlier week. Polyester inventories decreased on good sales ratio. However, demand for spot MEG was still limited as polyester plants mainly used contract supplies. The market retreated apparently in late week along with the decline in commodity market. MEG in Huaxicun Commodity Contracts Exchange hit the down limit on Friday. The highest and lowest traded prices for prompt goods were at 6,250yuan/mt (Apr 11) and 5,820yuan/mt (Apr 14); for H2 May were at 6,250yuan/mt (Apr 11) and 5,830yuan/mt (Apr 14). USD market moved down sharply this week. Transactions were mainly for near-term cargoes, so the contango shrank. The market plunged on Friday as foreign traders were eager to sell.
Transactions improved apparently. CFR China/China domestic MEG spread was at 180-210yuan/mt. The highest and lowest transaction prices were $742/mt and $690/mt. Commodity market dropped this week as tightening monetary policy weighed on sentiment, which also dragged down MEG market. The market showed more financial features this week. Polyester inventories decreased on good sales ratio, but the support on demand for MEG was limited.

China MEG Market Forecast
MEG inventory decreases in April while spot availability remains ample in the market. Polyester inventories are still higher than the levels in the same period last year, despite improving sales ratio. Speculative buying activities were weak from both polyester plants and traders. In addition, the decline in commodity market on tightening monetary policy also weighs on sentiment. MEG market is likely to maintain week in short term.
Apr 17, 2017 15:10
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