The report is divided into three parts.

First, geopolitical disruptions and higher costs - market trading shifts from sentiment to reality. This part analyzes the recent market situation. Affected by conflicts, energy and chemical commodities have trended higher. Shipping congestion in the Strait of Hormuz has virtually brought global oil logistics to a standstill. Amid rising costs and concerns over feedstock supply, oil-based producers have implemented production cuts, leading to lower operating rates in the MEG sector. The price center of MEG has shifted upward accordingly, with limited room for further increases in plant operating rates going forward.

Second, will MEG market move into shortage under the medium-term structure? There are three realities: 1. Total inventory and port inventory are both high. From the inventory-to-sales ratio perspective, circulating supply remains ample. 2. Against a backdrop of high oil prices, syngas-based MEG margins have improved markedly. After major units complete maintenance, overall operating rate is expected to return to high levels. 3. Contradictions are building in the polyester chain. Negative feedback is likely to emerge in March-April, limiting further increases in polyester polymerization rate.

Third, capacity expansion continues-MEG outlook for the 15th Five-Year Plan period. During the 15th Five-Year Plan period, a large volume of new MEG capacity is still scheduled to come online. Chinese MEG capacity is projected to reach around 37 million tons by 2028, with syngas-based capacity accounting for over 40%. Oversupply will be a long-term trend, and Chinese capacity will further replace overseas production.