Volatility is Mega-Trend of Monoethylene Glycol (MEG) Market

Monoethylene glycol (MEG) is a versatile large-scale chemical intermediate embedded in complex chemical commodity chains, composed of various upstream (incl. crude oil and offgas) and downstream products (e.g. polyethylene terephthalate or PET and its multiple derivatives). These chains mostly exist within large integrated petrochemical complexes owned by multinational corporations, like SABIC, SINOPEC, Shell, Nan Ya Plastics Corp. or DOW Chemical, which happen to be among the main MEG manufacturers.

The structuredness, complexity, dynamicity and specificity of these chains increase MEG market volatility and complicate predicting MEG market behaviour. For instance, recent fluctuations in oil prices and new MEG capacity additions in India by Reliance Industries Limited (RIL), can adversely affect profit margins of some Asian MEG producers, especially in China, which remains the second largest MEG manufacturer and important MEG exporter in the world.

Monoethylene glycol: structure of the global production by country, 2015

However, better provision of the India’s demand for MEG after RIL’s expansion may be not particularly detrimental for Asian MEG exporters. The synergy of oil price fluctuations coupled with a seasonal restocking campaign and increase in demand for MEG in China on behalf of PET manufacturers may easily upturn the bearish trend within a very limited period of time. Nevertheless, it goes without saying that such fluctuations and instability of the MEG market can dampen confidence of MEG producers.

More information on the MEG market can be found in the in-demand research report “Monoethylene Glycol (MEG): 2017 World Market Outlook and Forecast up to 2021”.