Asian monoethylene glycol tumbled to an 18-month low of $960/mt CFR China and Yuan 5,850/mt domestic price on Wednesday amid bearish market sentiment on lack of support from either upstream or downstream.
CFR China MEG slumped close to 14% month on month, with average October price at $859/mt and $741/mt to date in November.
January ICE Brent crude futures fell from October 1 at $82.34/b to $65.28/b on Wednesday amid concerns of a global supply glut given record-high production in Russia and Saudi Arabia and increasing inventory in the US.
The margins for naphtha-based and ethylene-based MEG were calculated around $105/mt and minus $47/mt respectively on Wednesday, with CFR Japan naphtha assessed at $512.25/mt and CFR Northeast Asia ethylene at $970/mt on Wednesday, S&P Global Platts data showed.
Downstream demand from the PET, polyester and textile sectors remained tepid amid off-peak season for bottle grades, uncertainties due to the US-China trade war regarding textile products and a weaker Chinese economy.
As a result, polyester stocks hit a record high and three major Chinese producers announced a reduction of 3,600 mt/day of output, though "the actual amount of cuts will depend on the recent sales situation," a polyester manufacturer said.
Supply of MEG is ample as well, with the startup of two new coal-based MEG plants in China in October -- Hualu Hengsheng's 500,000 mt/year plant at Shandong and Zhongyan Hongsifang's 300,000 mt/year facility at Anhui.
A company source said that Hualu Hengsheng's plant was operating at around 70% of capacity. Zhongyan Hongsifang's plant was also running around the same level, sources said, but this could not be confirmed with the company.
Market sentiment is expected remain bearish until the end of the year, even though some participants said that prices had almost bottomed out.
