ECONOMIC ISSUES OF ETHYLENE GLYCOL

2.1 CURRENT ISSUE REGARDING ETHYLENE GLYCOL

Monoethylene glycol (MEG) that accounts for more than 90% of the overall ethylene glycol
market is consumed primarily in the production of polyester terephthalate (PET), which is
subsequently used for the production of fibers, films, solid-state resins and other consumables.
PET applications commanded 84% of global MEG consumption in 2015. Overall, consumption of
ethylene glycols is broadly tied to the general economy and has been increasingly linked to
emerging economies, where the improvement in living standards is driving an increasing use of
packaging, films and textile fibers, as well as an increasing number of vehicles (antifreeze).

From a regional standpoint, Northeast Asia has become the dominant MEG consumer
globally, accounting 63% of the 2015 demand. Within this region, China is by far the largest
consumer, with 84% of regional consumption in 2015, China alone accounted for about half of the
MEG consumption globally. The growing textile industry in China has been a key driver for the
increasing demand for polyester fibers. Most Chinese MEG consumption growth has been driven
by the increasing production of PET polymer, Chinese PET capacity has grown at a sustained rate
of 14.5% per year over the past 15 years.

China being one of the largest producers and consumers has focused on production of
ethylene glycol from coal as compared to traditional petrochemical route. China imports ethylene
glycol from neighboring regions such as the Saudi Arabia, Taiwan, Singapore, Canada, S.Korea
and Iran due to the output not increasing significantly despite the increase of production capacities.
However, China is expected to provide better opportunities for the global ehylene glycol market.