Forecast posted on August 2020

At the moment we believe the North American MEG market will remain tight through the end of the year. NanYa at Point Comfort is down and has informed customers it will have no spot until possibly January of 2021.  Many believe the plant will remain down and they will begin tying in a second unit and startup in November or early December and then have to build inventory. In the meantime MEGlobal is taking turnarounds at both Prentiss units starting this month, Dow has a turnaround at Seadrift next month and Shell also has a turnaround.  Spot prices overseas and in particular Europe also spiked due to constrained supply (they were relying on US imports for months), so any extra can move offshore at the moment. If demand picks up later this year there will be further upward pressure. A Covid19 cure will  add fuel to the fire and create additional firming.  At this point we think prices will move up the US 3 cts/lb in September and possibly adjust higher again in October, November and December. Much depends upon the relative health of the US economy (pardon the obvious pun), but if demand rebounds with a V shaped curve the momentum could carry us into January with another increase. After that however unless some plants have unforeseen issues or there is more downtime we don’t have on the books yet we think prices could crest sometime in Q1 and begin to correct in part due to the added capacity. We will definitely have a boom but we are a little less certain about the timing for the bust. The trajectory of crude prices is often a good indication of the general trend. Seasonally we normally reach a bottom by early summer and if the cyclicality holds and barring other variables then perhaps there will be increasing stability again in late summer if global markets have recovered enough.

 

*Please note forecasts are based on analysis of historical trends and cycles as well as expectations regarding future supply and demand patterns. The data is provided for informational purposes only and Chemical Intelligence does not assume any liability for any decisions attributed to reliance on said information.