Interview with Kamlesh Parwani

Face2Face
Kamlesh Parwani
Kamlesh Parwani
Commercial Director
MEGlobal
MEGlobal

Supply of merchant monoethylene glycol (MEG) unable to meet demand
MEGlobal's sole focus is the manufacture, supply and marketing of merchant monoethylene glycol (MEG) and diethylene glycol (DEG), collectively known as ethylene glycol (EG). Set up in July 2004, MEGlobal is a wholly-owned subsidiary of Equate Petrochemical Company headquartered in Dubai. It manufactures more than a million metric tonnes of EG annually at its three manufacturing plants in Alberta/Canada and Kuwait. The company markets in excess of 3.5 million metric tonnes of EG after procuring from its global supply partners. Kamlesh Parwani, commercial director of the company, spoke to Fibre2Fashion about the supply-demand for MEG and its expansion strategies.

How do you see the crude market for the next six months? Even though crude and ethylene prices have witnessed a downfall, MEG prices are still up. What are the prime reasons for this?

We are not in the crude business but all the market indicators point towards a range-bound crude pricing for years to come. The cuts by the Organisation of Petroleum Exporting Countries (OPEC) have indeed worked but it is a double-edged sword. The moment the prices go higher than the tipping point, it paves the way for resumption of shale producers. Eventually, the market rebalances and if it falls below comfort zone, the Gulf producers experience pain and reduce the outflow. We know a little better than others and we feel here it is a pure demand-supply play. Presently, the downstream demand is quite healthy and the supply is unable to match it. It is also reflected in the low coastal inventory numbers in China.

Which other major players apart from MEGlobal have been influencing the market? Has there been an addition in the capacities from Asian region?

MEGlobal is clearly one of the global leaders in the glycol world having operations and marketing rights in Canada, the United States, Europe and the Middle East. Our additional capacity of around 800 kt would come on stream sometime in Q2 2019 and that would enhance our existing global footprint. There are other reputed suppliers who too are boosting capacity, but most of them will start operations in 2019 or beyond. Within Asia, except India's Reliance that is expected to start sometime in 2017 there will be no more additional supply by any company using conventional technologies.

How is the supply-demand and overall market situation expected to be by 2017 end?

The supply and demand patterns played out indicate that the long-term fundamentals of this industry are intact. As expressed above, the demand across the globe has been fairly robust with China and India leading the pack. This year, China, with a higher denominator, is expected to grow at around 4-6 per cent and India, with a lower base, at around 10-12 per cent. Europe, at around 2-3 per cent, has witnessed a healthy growth this year and the United States has witnessed around 1-2 per cent growth. Overall, the global growth rate for glycols is hovering between 4 and 5 per cent which translates to about 1.2 million tons annually.

There have been talks about MEG production from coal in China. How is MEGlobal coping with that upsurge?

The way shale-based glycol production is going to become a reality in the United States, producing olefins or glycols from coal is also a move by Chinese producers to combat dependence on imports, utilise the available natural resources and benefit the economy of the coal-rich provinces. But unlike conventional technologies, this one has not yet been fully proven to run at higher operating rates. It is improving, but will continue to have its challenges related to environmental concerns and the cost dynamics when coal prices shoot up. Moreover, these plants are located in areas far from the polyester producers, and therefore, the transportation costs would also need to be factored in. It is also very dependent on reliable and large availability of scarce resource - water. But, it is gradually gaining confidence and is maintaining growth momentum in the Chinese market.

Do you think the national textile policy will influence the growth of the man-made fibre (MMF) market in India in the next 10 years?

Like all product range and markets, the policies and their implications would determine the sustainability of any industry. If we go back a few centuries, India was known for its heritage textile exports and rich, vibrant offerings. It was and I think continues to be as critical a sector as agriculture providing livelihood to millions of households. India is also capable of adapting to all IT-related disruptions, like 3D printing, maintaining the artistic inheritance of skills and culture at the same time. If we have to leverage the learning from the telecom policy of 1999, it proved to be the game changer that provoked the telecom revolution. India needs something on those lines to capture the huge domestic growth potential and to enhance competitiveness in export market.

Which are your major export markets? Has there been a shift in your prime export markets in the last few years?

Being a global supplier, if there is a potential customer in a region unknown today, we would find a way to make our glycols reach it. Having production capabilities in most continents helps us being local while having global penetration.

What will be MEGlobal's strategy for 2018? What are you growth expectations for the next fiscal?

Be it 2018 or beyond, our strategy is simple: sustainable growth while increasing customer base; act local while think global; and continue to be customers' choice as a supplier. (RR)

Published on: 07/09/2017

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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