MEG Price Increase in the USA and Europe, Likely to Follow the Same in Coming Months

February 2024, Mono Ethylene Glycol (MEG) prices in the US market witnessed a bullish trend, notably price surge of around 12%, the highest in the past six months. In the past several months, the global market of MEG has been facing a shortage due to plant shutdowns or operating capacity reduction by the market key players.

Reportedly, Dow Chemical Company, Texas reduced the operation capacity from 33333 TPM to 25580 TPM, Indorama Venture in Texas reduced operation capacity from 45833 TPM to 31048 TPM and Louisiana based Lotte Chemical Corporation reduced from 58333 TPM to 37634 TPM owing to the Freezing Cold weather in the January 2024. This unexpected MEG production loss turned the inventory depleted that eventually affected the spot price of the product. Additionally, a global key player, Saudi Arabia, reports the shutdown of the both units of Eastern Petrochemical company (SHARQ), No.1 and the No.2 in Al-Jubail, a key player in MEG production became the critical reason for price increase and supply-demand dynamics disturbance globally. To elaborate, fluctuations in the global crude oil prices has also compelled US to increase the price of its derivatives including MEG, buoyed by high production cost. On the other hand, from the downstream industry, moderate demand observed from the PET bottle, food packaging and polymer manufacturing industries, after the slight improvement in weather, stretching the commodity’s prices. In winter season, MEG remains the crucial product for the anti-freeze segment globally that also motivated the manufacturers to standardize the product price. Adding to the complexity, marine logistics disruption has added a significant complexity in the trade mainly for the west and Asian market due to the red sea crisis, and the altered marine route imposing the additional freight charges that has been supporting the overall MEG price hike. 

In the European market, difficulties remain the same as the USA, MEG price soaring in European nations since the early 2024. In Germany, the price for MEG, increases around 2.5% during the month. The market expresses a bullish trend due to elongated demand in the region amidst the curtailed and expensive supply. Furthermore, the support from the feedstock Ethylene Oxide market, which had been bolstering MEG prices, contributed to the overall hardness in the MEG market. However, geopolitical as well as natural calamities have been a pivot factor in the scenario that ultimately became a void in supply demand dynamics. To elaborate, along with the global logistics disruptions, the European market has also been facing domestic logistics disruption as European countries experiencing consecutive strikes since the early 2024. Initially public transport drivers’ strike against the demand of good pay and reduction of duty hours, affected the trade route and transportation facilities across the German border, later farmer protesting against the rising energy cost and cheap import. Farmers have jammed various borders, causing the disruption in transportation across the borders.

To Conclude, as per the Analysts anticipation, Price ae expected to follow the same trend in European market in coming month, as the current market situation is likely to persist in coming months too, while in US, prices may ease down in the current month.