CBIChina

Some petrochemical giants like SABIC, DOW and Lottte will put new MEG units into production during 2008. According to statistics, new MEG capacity rise to 3.4 million tonnes/year in 2008.
Farsa Chemical’s 400,000 tonnes/year NPC #10 Farsa plant in Assaluyeh, Iran was put into production in March 2008 and around 200,000-250,000 tonnes of the goods will go into China market each year. Lotte’s 400,000 tonnes/year MEG unit in Daesan came on stream in June, but was running at low rates with limited numbers to the China market.
In the second half of 2008, another four new plants will be put into production. PetroRabigh built a 600,000 tonnes/year MEG unit in Rabigh with Saudi Aramco and Sumitomo Chemi holding 50% each. The unit was expected to be on stream at the end of 2008 and related sources said that there would be 400,000-500,000 tonnes of the goods heading to the China market each year. DOW’s 600,000 tonnes/year Equate 2 unit in SHUAIBA was built in early July and recently began commissioning. Company sources stated that products would be ready for the market at the end of July or early August. Sabic will have two new units running at the end of 2008; one 700,000 tonnes/year AL-JUBAIL Sharq4 unit and the other a 700,000 tonnes/year Yansab unit in Yanbu. But the specific supply volumes to the Chinese market was uncertain, so it was hard to judge how they would impact the local market.
After start-ups of the new units, MEG market will experience oversupply. Players have been aware that the surplus capacity will create a blowout in the MEG market, so global production operation including shutdowns and maintenance will become more rational to balance supply and demand. DOW said that they would permanently shut down their 130,000 tonnes/year unit in the Netherlands after the start-up of its Equate 2 unit so as to control capacity and reduce costs.
Domestic producers, Daqing PC delayed the start-up of new units to 2009 to avoid the negative effect. Players said that whether the market would pick up after adjustment of the domestic textile export rebate was yet to be seen.