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Insight | Time:Dec 27 2017 9:04AM
Spot MEG stock of polyester plants in Jiangsu and Zhejiang (Dec 25, 2017)
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Spot MEG stock of most polyester plants kept at 5-20 days by Nov 27. MEG stock of some plants was 20, 13, 8, 7, 13, 13, 6, 8, 13, 7, 15, 5, 12, 5, 5, 7, 14, 12 days. The average MEG stock volumes were around 9.9 days. Polyester plants mainly purchased just enough to cover their requirements as MEG prices changed little in Nov. Small-to-medium producers mainly held their stocks at 5-7 days, while some large ones controlled their stocks at 13-20 days

MEG prices were volatile in November, and spot prices moved broadly flat with forward. Overall transactions weakened. The market moved up in earlier Nov as the rise in commodities boosted market sentiment. Transactions were mainly for nearby contracts. Selling indications emerged when spot price stood over 7,500yuan/mt. In mid-Nov, MEG prices retreated rapidly along with the decline in commodities. However, polyester plants enquired actively when spot price fell below monthly average level. The market shivered slightly in late month. Some traders covered shorts during delivery, while were not eager to keep chasing up.

The market mainly tracked the movement in commodity futures in Nov. Spot availability became ample as delayed cargoes arrived and some major players cut positions. Most traders were cautious and mainly waited on the sidelines, showing modest intensions to hold positions.

MEG market was fundamentally healthy in Nov and inventory continued decreasing. Outside China, Sharq4, Equate2 and Kayan were under turnarounds. Reliance's Jamnagar MEG units was running unstably, and its cargoes to China delayed. In demand side, polyester product inventories remained low, and operating rate was still high. In end Nov, polyester sales ratio weakened and some plants lowered prices.

Offtake of major ports accelerated in Nov, as demand for MEG remained firm on high polymerization rate. Polyester took off contract goods rapidly with discharging of delayed cargoes in late Oct. In addition, offtake of Zhangjiagang also accelerated as some polyester plants sold spot and bought forward goods in late Nov. Total offtake volume of Zhangjiagang International, Taicang and Ningbo was at 13,000-14,000 tons per day.

* The selected 18 sample plants have a total polyester capacity of 21.26 million tons, about 44.76% of total. (Since November 1st, 2017, China's polyester capacity is adjusted to 47.5 million mt/year). We give priority to polyester plants with capacity over 300kt/year and MEG term contract proportion below 80% when choose the samples.
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