China's MEG outlook seems positive albeit with some challenges

03-Nov-08

Addressing China Chemicals Industry Conference in Shanghai, a senior executive with Shell Chemicals has projected China to consume in excess of 50% of the global mono ethylene glycol (MEG) production by 2015. The rise in the mainland's MEG demand will be due to internal demand as well as exports of products including polyester fibre and polyethylene terephthalate (PET) resin among others. The company's investments in new MEG production capacity and the newly developed 'Only MEG Advantage' (OMEGA) process technology re-emphasizes Shell's endeavour to be a prime player in the global, Asia Pacific and China MEG markets. The company's OMEGA Technology team has recently won the prestigious SELLAFIELD LTD AWARD FOR ENGINEERING EXCELLENCE at the IChemE awards ceremony in Birmingham, UK. However, the Shell Chemicals noted that the current scenario may pose hindrances like tightening credit, rising Chinese currency, increase in labour wages, inconsistent incentives for exports and global financial turmoil. The new MEG capacity coming on stream globally may also lead a supply-demand disparity. Other factors like lesser per capita consumption for PET, polyester fiber and spike in oil prices are likely to hurt prospects of MEG demand in the mainland.