How far would MEG cost decline?

In Asia, MEG cost based on CFR China term has been following the firm trend since late December 2016 due to tight supply across the region. However, prices started to tumble after the Lunar New Year holidays given softer demand from the downstream markets. 

Compared to its peak during the first week of February, MEG cost based on CFR China term has shredded approximate $135/ton to reach $823/ton on Monday, 6 March 2017. Industry participant blamed slow demand in the PET bottle industry to be the main cause of such rapid price deterioration. Yet, this trend does not seem to be sustainable, players added, considering a good number of plants undertake maintenance shutdown. The following table summarized the scheduled overhaul at regional and overseas MEG plants.

A PET bottle resin producer in China commented, “As a result of falling upstream costs, we are able to down-adjust our offers in the past couple of weeks. However, MEG supply might be tightened in the near term in line with the improved demand condition in the downstream PET plants during the peak season.”  

Another market source added, “Room for further reduction therefore might be limited and we believed that market might head for stabilization soon.”