China Market Reports 7 August 2017

China MEG Market Review

Domestic MEG prices fluctuated upward earlier this week, and transactions were moderate. Then the market
weakened slightly. Spot goods were relatively firm, so the backwardation widened. More selling indications
emerged during the downtrend, while buying sentiment modest. A few polyester plants also procured during
the downtrend. The highest and lowest traded prices for prompt goods were at 7,500yuan/mt (Aug 1) and
7,240yuan/mt (Jul 31); for H2 Sep goods were at 7,400 yuan/mt (Aug 1) and 7,200yuan/mt (Jul 31). CFR China
market shivered slightly this week, and transactions shrank apparently. Discussions were mainly for nearby
cargoes. Financing firms were active to buy. The market was in evident backwardation structure. CFR China price
was much lower than domestic level in late week, at about 30-50yuan/mt. The highest and lowest traded levels
were $895/mt and $865/mt CFR.
Spot availability was still concentrated and tight, so spot prices were relatively firm. In short term, several
polyester plants lowered operating rate on sluggish sales ratio, which weighed on market sentiment. MEG prices
may decrease in medium to long term, as domestic production and import both increase on higher prices.
Currently, operating rate of domestic MEG plants recovers to more than 78%.

China MEG MArket Forecast

Polyester market was weak recently on sluggish sales ratio and accumulating inventories, which heavily weighed
on market sentiment and dragged down the control of major players. Around 150kt of cargoes will arrive in the
second week of Aug, but most of the arrivals are contracts to polyester plants, so the tightness in spot market
may not ease clearly. MEG market may correct down, while spot goods will be relatively firm. Eyes could rest on
polyester sales ratio and capital flows.

Aug 7, 2017 15:10
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