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Monoethylene glycol (MEG) markets and trades are expected to grow steadily on a long-term basis, supported by strong PET demand, according to Joyce Lee, director, olefins & derivatives, at S&P Global Commodity Insights, as per Chemweek.
However, the MEG markets require time to digest the additional capacities before recovering to a more balanced market. Further, Lee cautioned, "policy volatility will add to the already oversupplied market and [exerts downward] pressure on the MEG market." Lee was speaking at APPEC 2025 in Singapore on Sept. 9.
In recent years, annual capacity additions have outpaced demand, pushing operating rates below 60%. “Capacity has grown twice as fast as demand,” Lee said, who highlighted that recovery to normal operating rates at around 80% is unlikely before 2030.
In 2019, North America, the Middle East and China dominated equally. However, in the last five years, China has driven most capacity additions, accounting for half of global production.
In addition, the diversification of MEG production routes has been observed, driven by China’s coal-to-MEG additions in the past five years, raising coal-based products to around 40% of the country's total MEG capacity. "This has elevated the coal-based product share from 12% to nearly 20% globally," Lee added.
These recent developments have raised China’s self-sufficiency from below 50% to over 75%. Consequently, China's total MEG import volume has declined significantly, around 35% lower compared to 2019. “This decline has impacted global MEG imports, which have decreased by 22%, equivalent to 1.9 million metric tons (MMt), despite a 23.5 MMt capacity expansion globally,” Joyce said.
The statistics highlighted the challenges for MEG producers, as producers struggle to find export outlets amid falling trade volume. “MEG market prices in Asia are under pressure, hovering at around low $500s per metric ton,” the speaker noted.
On the MEG variable cost curve, Lee said that producers in the Middle East and North America hold the most competitive production cost using ethane as feedstock, followed by coal-based producers in Middle East, North America and China, which together assumed around 75% of total MEG demand in 2024. Meanwhile, producers in Western Europe and Northeast Asia that rely on naphtha crackers will struggle with cost advantages for the foreseeable future.
As the oversupplied situation is expected to persist, Platts estimated that North American producers that operate ethane crackers may approach breakeven around 2027 to 2028. However, recovery in Northeast Asia and Western Europe is unlikely until after 2030, as producers face negative margins, which resulted in operational cutbacks in Taiwan and South Korea.
Current global MEG trade flows are predominantly between China and the Middle East. In 2024, China accounts for about 70% of total global MEG net imports, with India following at 15%.
Between 2019 and 2024, the US gained ground as a key import source for China, accounting for 13% of China’s imports in 2024. However, China’s import volume from the US declined drastically after tariff conflicts between the two nations. Platts data showed that the gap was swiftly filled by exports from the Middle East in the first half of 2025.
In the US, two-thirds of MEG production is exported. However, the US export market remains balanced, even as exports to China have dropped significantly, redirecting exports to Turkey and India.
”For the past few months, the real impact of the tariff on the US export markets was relatively limited,” Lee said, highlighting potential confounding variables within the data due to a series of outages in the US early in the year.
Tariff policies have changed frequently, creating uncertainties. “Consumer sentiment is weakening, which could impact spending and demand in downstream sectors,” Lee warned.
PET demand remains strong in the long term. “This strong demand will support steady growth in trade,” Lee said.
Lee said that even if capacity growth has slowed, the oversupply situation needs time to rebalance. Short-term uncertainties and policy volatility will add pressure to the MEG market. However, the long-term outlook remains positive, driven by strong PET demand.
mrchub.com