India: The world leader in Mono Ethylene Glycol (MEG) and Diethylene Glycol (DEG) production, MEGlobal has reduced December contract prices for MEG by almost USD 10/MT compared to November for the Asian market, observing weak demand from the downstream packaging sector. The reduction in price by MEGlobal has been after considering the Asian market condition, which is seen fading away.

MEGlobal intends to replace the CFR China-based prices with an independent pricing structure for its Indian clients. According to the new strategy, the subsidiary of Equate Petrochemical Company in Kuwait will routinely publish India contract prices. The reason behind the step is to delink the country's MEG contract prices from Chinese CFR costs. Since all MEG contracts in India are currently priced on CFR China values, thus, it is no longer feasible for manufacturers to adhere to benchmarks.

The company also revealed that " Mono Ethylene Glycol (MEG) margins are anticipated to remain muted in 2023 as operating rates in China have fallen below 60% because of the weak demand from its end-use packaging and polyester sectors. Also, the region's zero-Covid policy has weakened the market sentiments towards the product."

MEG, along with Purified Terephthalic Acid (PTA), is the feedstock for the production of Polyethylene Terephthalate (PET) Bottles. The consumption of PET Bottles has recently lowered in the winter season. Thus, foreseeing the reduction in consumption, MEGlobal reduced its December contract price by USD 10 per tonne below November levels.

Further ChemAnalyst prediction suggests, "Recently as demand for MEG from its derivative markets was observed sinking, the contract price for the Indian market have been reduced by MEGlobal for December 2022, thus relaxing the price for MEG in the domestic market. Further, following the downtrend in its demand, the contract price for India is set to remain low even at the start of 2023."