ASIA CHEMICAL PROFILE

BECKY ZHANG AND ELAINE BURRIDGE FIRST ASIA MEG PROFILE

MEG
USES The main use for monoethylene glycol (MEG) is the production of polyester bers, resins and lms. Polyester bers are the main consumer with the second-largest use in polyethylene terephthalate (PET) resin, followed by automotive antifreeze. SUPPLY/DEMAND Anticipated short supply in 2011 for Asia MEG because of no new capacity additions and strong downstream demand growth in China spurred a round of purchasing at the start of the year. However, strong buying activity weakened in the second quarter and the market was oversupplied until a re at Formosa Petrochemical Corp (FPCC) in Taiwan in May. FPCC subsidiary Nan Ya Plastics shut four units with a combined capacity of 1.8m tonnes/ year, or 9% of Asias total capacity. Supply tightened further because of turnarounds from September to November, affecting a total of 3.2m tonnes/year, 16% of Asias capacity. Demand in Asia slowed at the end of the year, but supply continued to increase, driven by lucrative margins for MEG production. With shutdowns over and an inux of imports from the West, Chinas port inventories reached a historical high of 750,000800,000 tonnes in the rst quarter, 2012, against the usual level of 400,000500,000 tonnes. The oversupply is expected to continue into the second quarter. However, supply in the second half of 2012 is expected to be tight. Close to 9m tonnes/year of new polyester proASIAN MONOETHYLENE GLYCOL SPOT PRICES
$/tonne, CFR China Main Port
1,350

duction is expected in Asia this year. The only extra MEG capacity is a 500,000 tonne/year plant in China.

MAJOR ASIAN MEG CAPACITY* 000 TONNES/YEAR

Company Nan Ya Plastics Shell Eastern Petrochemicals Honam Petrochemical Zhenhai Refining and Chemical Shanghai Petrochemical TOC Glycol Optimal Glycols Nan Chung Petrochemical Sinopec Sabic Tianjin Petrochemical BASF-YPC CNOOC/Shell Petrochemicals Honam Petrochemical Mitsubishi Chemical Yangzi Petrochemical Indian Oil Oriental Union Chemical PT Polychem Indonesia Nippon Shokubai Location Mailiao, Taiwan Jurong, Singapore Daesan, South Korea Ningbo, China Jinshan, China Capacity 1,440 750 650 650 605 450 390 380 360 360

PRICES The Asia MEG market was bullish at the beginning of 2011. Prices peaked at $1,250 1,280/tonne CFR (958981/tonne) (cost & freight) CMP (China Main Port) in mid February before slipping to $1,0901,110/tonne in early April. Prices then rebounded, hitting a 44-month high of $1,3201,335/tonne in September. Prices then fell to a 13-month low of $1,0401,065/tonne at the end of November. From December 2011 to February prices were at $1,0501,130/tonne, underpinned by speculative buying from traders on expectations of strong market fundamentals in 2012. TECHNOLOGY MEG is produced by direct oxidation. Ethylene is oxidated in the presence of oxygen or air and a silver-oxide catalyst. Fractional distillation under vacuum of the crude ethylene glycol mixture separates the MEG from the diethylene and triethylene glycols. OUTLOOK The volatility in Asia will continue in the next three to ve years because of mismatched MEG expansions and rising demand for polyester. Global polyester production will reach nearly 80m tonnes/year by 2015, up by 8%/ year from 60m tonnes in 2011, according to global consultancy PCI. Asia, especially China, India and Indonesia, will be the primary driver of demand growth. The world will need an additional 1.5m tonnes of MEG every year to satisfy an additional requirement of about 5m tonnes/year of ber. In Asia, there are only two Chinese oilbased MEG projects, with a combined capacity of 740,000 tonnes/year, due to be completed by 2013. A few projects are planned in India and the Middle East, but these are likely to be delayed to 2015 and beyond because of feedstock supply constraints. Several projects are being built in China, using coal, ethanol, and methanol. The most promising are the methanol-based projects, and the rst 500,000 tonne/year plant is likely to be on stream at the end of 2012.

Reliance Industries Hazira, India Map Ta Phut, Thailand Kerteh, Malaysia Mailiao, Taiwan Tianjin, China

Nanjing, China Huizhou, China Yeosu, South Korea Kashima, Japan Nanjing, China Panipat, India Lin Yuan, Taiwan Merak, Indonesia Kawasaki, Japan

320 320 280 280 260 250 250 215 210 200 200 200 200 170 150 150

Henan Anyang Anyang, China Chemical Industry Liaoning Huajin Chemical Liaoyang Petrochemical Panjin, China Liaoyang, China

1,150

Tongliao Jinmei Tongliao, China Chemical Industry Reliance Industries Dahej, India Jilin PetrochemicalsJilin City, China China Man-Made Fiber
*

950

750

Kaohsiung, Taiwan

excludes plants under 150,000 tonnes/year Source: ICIS

550 Jan 2010

SOURCE: ICIS

Mar 2012

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