Innovative Futures: Cost weakness, improving import expectations, and MEG futures prices fluctuating in a range-bound adjustment

On the supply side, last week domestic MEG total operating rate decreased by 0.32 percentage points MoM, and coal-based operating rate decreased by 3.2 percentage points MoM. East China MEG port inventory decreased by 66k tons MoM. In July, coal-based MEG plant operating rates are concentrated, and it is expected that total MEG operating rate will further decline. It is expected that MEG will undergo significant destocking in June-July. The risk lies in the easing of geopolitical tensions and the expectation of restarting overseas plants later, which may bring an increase in import supply.

On the demand side, orders and operating rates in the weaving sector are slightly divergent, with knitting performing better than weaving. End-users mainly digest raw material inventories, with just-in-demand purchases following up. The operating rates of texturing and weaving machines in Jiangsu and Zhejiang have rebounded for three consecutive weeks.

In summary, MEG destocking will continue in July, but with expectations of overseas plant restarts, rising import expectations, and the sharp drop in crude oil triggering collective adjustments in the polyester sector, MEG futures prices are expected to fluctuate and consolidate in the short term. Attention should be paid to the passage conditions of the strait and changes in plant operating rates. (Shouchuang Futures)