MEG Prices Bullish in December H1: Western Strength Outpaces Asia's Modest Growth

In Europe, particularly in Germany, MEG prices rose by 2.36% during this period, driven by strong demand from the PET resin production sector, which supplies PET bottles and food packaging materials. Seasonal replenishment activity spurred by higher holiday consumption expectations contributed to this price rise. However, despite strong demand, the region's overall price growth was tempered by a decline in overseas PET imports and an ongoing shift towards recycled PET materials, limiting broader price increases for virgin PET resin. Furthermore, while upstream ethylene prices, a key feedstock for MEG, showed some fluctuation, the production costs for MEG remained relatively stable. This helped moderate the cost pressures but could not fully offset the robust demand for MEG driven by the PET production sector.

Similarly, in the U.S., MEG prices increased by 1.28%, influenced by higher production costs, particularly the 1.37% rise in ethylene oxide prices. Rising crude oil prices also added pressure, with West Texas Intermediate crude reaching USD 71.54 per barrel, further elevating the cost of producing MEG. The U.S. PET resin market, however, faced fluctuating demand, with moderate procurement levels observed in the downstream PET industry. Inflationary pressures, as indicated by a 0.3% rise in the U.S. Consumer Price Index in November, along with rising freight charges, complicated supply chains, putting additional strain on MEG demand. Moreover, labor disputes between the International Longshoremen's Association and the United States Maritime Alliance caused delays and logistical bottlenecks, exacerbating supply issues for both MEG and PET resin.

In contrast, the Asia-Pacific (APAC) region saw only modest price growth, with China reporting a 0.84% increase in MEG prices. This restrained growth was driven by weak downstream demand for PET resin and insufficient cost support from the feedstock, ethylene oxide. However, PET resin operations in anticipation of the Christmas and New Year holidays, along with a slight uptick in overseas demand for PET products, helped alleviate some of the price pressures. Despite the varying regional trends, MEG inventories in Asia remained sufficient. The combination of local naphtha-based production and steady imports ensured that the supply of MEG was stable, which helped mitigate the impact of fluctuating demand and cost dynamics on PET resin production.

Overall, the correlation between MEG prices and PET resin production is clear: higher MEG prices directly influence the cost structures of PET manufacturers. As PET resin production relies heavily on MEG, fluctuations in MEG pricing are critical factors in determining the overall cost and pricing of PET products, especially in key markets such as Europe, the U.S., and Asia.

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CHEMANALYST(Dec 21 2024）|MEG Prices Bullish in December H1: Western Strength Outpaces Asia's Modest Growth