In the complex landscape of global markets, the month of March 2024 witnessed a mix sentiment in the United States' Mono Ethylene Glycol (MEG) market. After a sudden incline, this week expressed declination, marked a 0.8% reduction in MEG prices compared to the previous week, which is primarily attributed to a slight decrease in demand from the MEG downstream Polyethylene Terephthalate (PET) manufacturing industries. The reduction in demand observed from the areas such as PET bottle and food packaging sectors, influencing the general market sentiments. Concurrently, the prices of feedstock Ethylene Oxide experienced a surge of USD 10/MT during the same period, exerting additional pressure on MEG manufacturers’ margins.

The geopolitical tensions following the Ukrainian drone attack on Russian oil refineries contributed to the escalation of crude oil market prices. This recent event, coupled with disruptions in marine logistics due to incidents in the red sea, further enhanced challenges in the supply chain. As per the recent data (early March 2024), a hike of around 7-8% was observed in freight charges across US to China trade route in comparison to the last month. Consequently, inflation rates in the US saw an uptick, as confirmed by the Consumer Price Index (CPI) rising to 311 in February 2024 from 309 in January 2024, reflecting the effect of higher production costs, energy prices, and raw materials to consumers.

The German MEG market experienced the same pattern in the March 2024 as US market, but contrasting the dynamics, week-on-week basis. MEG prices continued to surge since the starting of month, driven by escalated feedstock prices coupled with the heightened production costs amidst sustained demand from downstream PET bottle and food manufacturing industries. Resembling the US market, the prices of Ethylene Oxide, a key feedstock for MEG, rose by approximately USD 10/MT in the German market during the week. The volatility in crude oil prices, fuelled by the geopolitical crises such as the Russia-Ukraine conflict, further affected the MEG prices.

Continued disruptions in marine shipments enhanced the challenges faced by the German market, with freight charges witnessing an increase of over 8% compared to the previous month. Adding to the complexity, labour union protests, particularly among transport drivers, proved an additional hurdle to supply chains. Despite these challenges, the Deutsche Bundesbank Eurosystem reported a rise in the German Consumer Price Index (CPI) to 127.2 in February 2024 from 126.4 in January 2024, indicating the inflationary pressures on the economy.

To conclude, analysts anticipate further MEG price escalation in the coming duration, influenced by the complex interplay of factors, including fluctuations in feedstock prices, demand dynamics, and evolving downstream markets.