Asian MEG Spiral Downwards Amid Fall in Polyester Sales and Piled-up Inventories

Lack of enquiries from the downstream polyester producing mills and increasing market anxiousness over the second wave of COVID-19 in several overseas countries has severely pressured the Asian Monoethylene Glycol (MEG) producers in recent weeks.

The polyester sales in the last week witnessed a double-digit decline compared to the previous week, depicting the adverse impact of ample polyester inventories after active restocking by the consumers in the initial weeks of the October month.

Spot MEG was heard trading around USD 470 per tonne CFR China in the week ending 30^th October while buyers lamented over price declines due to lack of export orders to India and Sri Lanka.

The temporary spike in polyester sales after China’s National Holiday generated a ray of hope among several Asian countries as the textile factories remained largely shut due to coronavirus. However, considering the fresh lockdowns implemented in Europe, the Asian textile industry fears another blow as export orders may get severely disrupted in the coming few weeks.

On the flipside, ChemAnalyst has reported a marginal rise in the Indian MEG rates under consistent spike in demand for polyester commodities and improved textile operating rates due to the upcoming festive season. With domestic prices touching USD 610 per MT, MEG fundamentals are bound to stay strong in this quarter buoyed by increment in consumption of downstream products.