Sentiment slightly improves for Asian MEG, backwardation flattens
Spot MEG prices were reported at $720/ton CFR China on November 8, down $20/ton on the week. Prices had seen a high of $960/ton CFR China three weeks ago.
Coal downslide likely to be balancing out
Coal futures had slumped by late October. China’s ‘dual control’ energy consumption policy had initially driven coal prices sharply higher. Thermal coal futures had been rallying but the Chinese government took drastic steps to intervene in the markets, in a bid to tame record high coal prices. China’s most actively traded thermal coal futures contract on the Zhengzhou Commodity Exchange, for delivery in January, fell more than 8% on October 25.
MEG futures on the Dalian Commodity Exchange plummeted CNY829/ton or more than 11% on October 25. MEG futures slid further on November 8, but the decline was marginal comparatively, at CNY121/ton on the week.
Traders said that the sharp decline in thermal coal futures had been extreme, that the futures had been oversold, and anticipate more price stability going forward.
Asian PET recovery boosts MEG and PTA feedstocks
Demand has improved for Asian PET bottle resin, with stable to firmer levels seen at $1100-1130/ton FOB China, and at $1130-1150/ton FOB Korea, according to ChemOrbis data.
A major Chinese PET producer has maintained resin offers to the domestic and export markets as demand has picked up. The producer expects China to ease its energy control policy that resulted in a national power supply crisis and crippled industrial production, including that of PET. “Supplies are tight in China because of the energy policy,” he added.
In Southeast Asia, import PET bottle offers for all origins were also reported stable at $1160-1240/ton on CIF, cash basis, according to ChemOrbis data. Converters are heard to have kept ramping up operations in Southeast Asia, aiding demand recovery for PET in the region.
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