Beginning in late October, ethylene glycol has once again entered a downward pattern. Although there have been occasional rebounds during the period, overall performance is still weak; as of November 16, the main ethylene glycol contract closed at 3682 yuan/ton.
In 2020, domestic ethylene glycol will usher in the stage of concentrated production capacity. At the beginning of the year, Hengli Petrochemical, Zhejiang Petrochemical and Inner Mongolia Rongxin Chemical three sets of equipment, especially Hengli Petrochemical and Zhejiang Petrochemical’s large-scale oil production equipment were put into production. Effective production capacity has increased significantly; at the end of the third quarter, the commissioning of multiple units such as Shanxi Woneng, Sinochem Quanzhou, and Zhongke Refinery further increased domestic ethylene glycol production capacity.
In early November, the 200,000-ton/year plant in Yongcheng, Henan and the 600,000-ton/year plant in Xinjiang Tianye Phase 4 were successfully discharged, and the plant load is steadily increasing. In the later period, the production capacity of 4 sets of facilities including Hubei Sanning, Yanchang Petroleum, Jianyuan Coal Coking and Shaanxi Weihua will be 1.24 million tons/year. The production will be released around December. The production capacity will exceed 17 million tons to 17.221 million tons, a significant increase of 6.19 million tons from the end of 2019, an increase of 56.11%.
Affected by the processing profit, the domestic ethylene glycol plant starts most of the time in 2020 below the level of previous years. The comprehensive daily operating rate once dropped to 50% in the middle of the year. However, the substantial expansion of the production base will make domestic ethylene glycol in 2020 There is still a substantial increase in supply. In October 2020, domestic ethylene glycol production was 738,000 tons, an increase of 158,400 tons over the same period in 2019; the cumulative domestic ethylene glycol production in the first October of 2020 was 7,137,700 tons, a significant increase of 1.0331 million tons from the same period in 2019. An increase of 16.92%. According to the latest production capacity and start-up data, on November 17, domestic ethylene glycol production was approximately 26,300 tons per day, an increase of 6,400 tons over the same period in 2019; with the subsequent launch of new production capacity, domestic ethylene glycol production is expected to increase. Further increase, the supply pressure of ethylene glycol is still relatively large.
With the end of the "Double Eleven" consumer festival, the terminal weaving market has gradually entered the off-season, and the fact that overseas Christmas orders will not be "hot" in previous years has further weakened the performance of the terminal market.
Compared with the weaving end, the direct downstream polyester market of ethylene glycol turned down earlier. Beginning in late October, after several weeks of high production and sales, as the replenishment of downstream companies has basically ended, although the start of the polyester plant has remained stable for the time being, market transactions have returned to flat. Except for the company’s price cuts to promote production and sales, Most of the time, the production and sales of all varieties of polyester were maintained at about 50%, which was a significant gap compared with the weekly average production and sales of "breaking 100" in mid-to-early October. As of November 16, the daily operating load of domestic polyester plants was 86.29%, a decrease of 1.37 percentage points from the same period in 2019.
Despite the impact of the new crown epidemic, the price trends of raw materials for the two ethylene glycol processing processes of oil and coal are indeed different. Thanks to the sharp drop in international oil prices in 2020, the processing cost of oil-based ethylene glycol has dropped significantly. The processing cost advantage of ethylene glycol no longer exists. Except for July, oil-based ethylene glycol can maintain a certain processing profit for most of the period in 2020, while coal-based ethylene glycol has been in a state of substantial loss for a long time, and the processing profit was once close to -1500 yuan/ton. Combining the two processes of oil and coal, the current overall profitability of ethylene glycol processing is poor. Therefore, if the price of raw materials does not fall further, the cost of ethylene glycol will receive strong support. According to estimates, as of November 16, the domestic oil-to-ethylene glycol processing profit was 195 yuan/ton, and the coal-to-ethylene glycol processing profit was -978.2 yuan/ton.
From the perspective of the supply and demand pattern, there are still many new ethylene glycol plants in the country that will be put into production in the later period. The supply of ethylene glycol is expected to further increase with the increase in production capacity; on the demand side, with overseas Christmas orders and the domestic traditional consumption peak season, the end Polyester and even terminal woven materials will gradually enter the off-season, and demand for ethylene glycol is expected to weaken.
Source: Chemical Network
