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Prospects for the Asian ethylene glycol market in 2020 remain bleak. Author/Source: Sinochem News. Date: January 6, 2020. Click-through rate: 33. Numerous large-scale projects are being put into operation, yet downstream demand remains weak. Affected by both the commissioning of several new large-scale facilities and a decline in China’s imports, the Asian ethylene glycol (MEG) market is expected to have a difficult year in 2020. The large-scale commissioning of new production capacity, coupled with a demand growth that fails to keep up, will lead to a decline in the operating rates of ethylene glycol plants in Asia. Production capacity will increase significantly. It is estimated that from late 2019 to 2020, the newly added ethylene glycol production capacity in Asia will reach 3.3 million tons per year. This will put pressure on a market that already has low profit margins. In China, the 900,000 tons per year ethylene glycol plant of Hengli Petrochemical and the 750,000 tons per year ethylene glycol plant of Zhejiang Petrochemical began trial production in the second half of December 2019, with full commercial operation set to start in 2020. Sources revealed that Hengli Petrochemical’s second 900,000-ton/year ethylene glycol plant will also be put into operation in 2020. Market sources say that in Southeast Asia, the commissioning of a joint venture plant for ethylene glycol with a capacity of 750,000 tons per year operated by Malaysia’s PETRONAS and Saudi Arabia’s Saudi Aramco may be delayed due to some mechanical issues. An ethylene glycol trader in Asia said, “These large-scale ethylene glycol projects that came online this year do not include those small-scale projects in China that use coal as a raw material.” 2020 will be a difficult year, as many large and small ethylene glycol plants will come online at that time. ” IHS Markit’s supply and demand data shows that in 2020, ethylene glycol capacity in Northeast Asia will increase by 18%, reaching 19.83 million tons per year. The operating rate will decline significantly. One market participant said, \"In the context of a weak global economy, the growth in demand for ethylene glycol downstream will certainly lag behind the rapid increase in supply; in 2020, suppliers will be forced to reduce the operating rate of their plants.\" ” Given the continuous increase in supply and weak demand, ethylene glycol producers in Northeast Asia may have to reduce the operating rate of their plants to balance the market. According to IHS Markit’s supply and demand data, the operating rate of ethylene glycol plants in Northeast Asia is expected to decline from 75% in 2019 to 66% in 2020. China’s imports will decline. China is the world’s largest importer of ethylene glycol, with annual import volumes remaining above 7.5 million tons over the past 5 years. However, an increase in the supply of ethylene glycol in the domestic market could lead to a decline in China’s imports of ethylene glycol in 2020. A Chinese ethylene glycol producer said, “China’s self-sufficiency rate for ethylene glycol is on the rise.” China’s imports of ethylene glycol are likely to decline in 2020. This may force overseas producers, especially those in the Middle East, to consider how they should redirect their goods if the Chinese market no longer requires as much merchandise as before. ” Data from IHS Markit shows that from January to October 2019, China imported 8.23 million tons of ethylene glycol, down from 8.3 million tons during the same period in 2018. China’s imports have declined, while India’s imports of ethylene glycol have increased. From January to September 2019, India’s imports of ethylene glycol increased by 13% on a year-on-year basis, reaching 566,000 tons. In the ongoing regular contract negotiations for ethylene glycol in Asia for 2020, Chinese end-users have more bargaining power and are demanding larger discounts, while suppliers are not eager to compromise. A Chinese trader said that if overseas manufacturers still wish to maintain their market share in China in 2020, they will have to offer more discounts. During the week ending December 6, 2019, inventory levels of ethylene glycol at Chinese ports dropped from a high of 1.38 million tons in April 2019 to 429,000 tons, the lowest level in two years, primarily due to reduced global supply and delays in the arrival of imported goods. However, as the Chinese Lunar New Year holiday approaches, inventory levels of ethylene glycol at Chinese ports are set to increase gradually due to reduced shipments. The Chinese market will be closed for a week due to the Lunar New Year, which has dampened buying interest in ethylene glycol shipments in January. In August 2019, due to the sharp drop in crude oil prices, an increase in ethylene supply, weak demand, and reduced cost pressures, spot prices of ethylene glycol in Asia dropped to their lowest level in 10 years. As port inventories in China began to decline, spot prices for ethylene glycol in Asia started to recover gradually in mid-November 2019, but the upward trend in prices was limited due to a bleak market outlook.