HomeIndustry InsightsGlobal MEG Operating Rates Fall to Historic Lows Amid Middle East Tensions

Global MEG Operating Rates Fall to Historic Lows Amid Middle East Tensions

2026-04-07

Global monoethylene glycol (MEG) operating rates have dropped to record lows, driven by a series of plant shutdowns along Saudi Arabia's eastern coast. The development carries significant implications for the production of polyester—a key material for bottles, packaging, and textile fibers—since MEG is one of its two primary chemical building blocks.

MEG, together with purified terephthalic acid (PTA), is polymerized to produce polyethylene terephthalate (PET), the plastic used in water bottles, food containers, and polyester fabrics. Typically, each ton of PET requires roughly 0.33 tons of MEG. As a result, disruptions in MEG supply can quickly translate into higher costs or reduced output for the entire polyester value chain, from clothing to packaging.

According to industry data from CCF (China Chemical Fibers Information Center), current MEG operating rates stand at 48% in Saudi Arabia and just 37% across the Middle East as a whole. Of the 19 MEG units in the region, only seven remain in operation—several of which are running at reduced capacity. By comparison, operating rates are 64% in China, 96% in the United States, and 57% globally.

The sharp decline follows more than a month of U.S.-Iran conflict, which has disrupted shipping lanes and forced production halts. CCF estimates that global MEG production losses have already reached 800,000–900,000 metric tons. Should hostilities continue and the Strait of Hormuz remain blocked, monthly global losses could exceed one million tons—equivalent to the MEG needed to produce over three million tons of PET.

For the Chinese market, a major global hub for polyester manufacturing, April MEG arrivals are forecast at just 260,000–270,000 tons, with some cargoes potentially entering bonded warehouses for re-export. Even if the Strait of Hormuz reopens by mid-April, May arrivals are unlikely to exceed 300,000 tons—partly due to re-export demand.

As a result, assuming no major collapse in domestic polyester demand, China is expected to see significant destocking of MEG in April and May, possibly exceeding current projections. By late April, MEG inventories at East China port terminals could fall to 700,000–800,000 tons, dropping further to 400,000–550,000 tons by late May, CCF forecasts. These tightening supplies may put upward pressure on polyester production costs and downstream textile prices.

Source: Based on a CCF analysis by Shi Jiaping, published April 3, 2026. Data and forecasts are attributed to CCF.