With the release of production capacity of three new units, including Xinjiang Tianye, Zhongke refining and Chemical Co., Ltd. and Shanxi woneng, the supply increment is gradually reflected. On November 6, the decline of ethylene glycol futures expanded, and the lower edge of the test range was 3650-3700 yuan / ton. If an effective break was formed, the falling target would be near the March low of 3300 yuan / ton. Under the background of capacity expansion, it is difficult to change the pattern of excess supply, and ethylene glycol maintains short position allocation in the medium and long term.
This year is a big year for ethylene glycol production in China. By the end of this year, 2.34 million tons of new units will be put into operation in China, and it is expected that new units of 2.34 million tons will be put into operation in succession, and there will still be a large supply of new units in China.
From the perspective of existing units, Wuhan Petrochemical and srbon Petrochemical two sets of units with a total of 320000 tons are still under maintenance, and the others are long-term shutdown or conversion units. According to Longzhong data, as of November 6, the domestic ethylene glycol production load was about 62.45%, down 0.43% from the previous Friday; the non ethylene glycol production load was about 52.95%, up 0.51% from the previous Thursday. With the gradual cooling of the weather, the coal price is expected to continue to strengthen, the cost of coal to ethylene glycol will increase, and the kinetic energy of the coal based plant which has been shut down for a long time is not large, and the supply of materials for the existing domestic devices remains stable.
Since March, the epidemic has spread abroad, and a large area of production stoppage has occurred in Europe, India and other places. However, China is in the stage of full resumption of work and production, and a large number of ethylene glycol supplies have poured into China. According to customs data, from January to September, the cumulative import volume of ethylene glycol was 8.628 million tons, with a year-on-year increase of 16.07%. However, since the fourth quarter, the maintenance plan of overseas units is too much, and the pressure on the import has been reduced. According to Longzhong statistics, the 700000 ton unit in Saudi Arabia's rabik was overhauled for 35 days in the middle of October, the restart time of 360000 ton unit of South Asia Line 2 in Taiwan was postponed to the end of the year, and the 720000 ton unit of South Asia Line 4 began to be overhauled for one month on November 4.
After the national day, the demand side expectations have changed a lot. According to the usual practice in previous years, in order to prepare for Christmas, foreign customers will place orders in advance. This year, affected by the epidemic situation in India, normal delivery cannot be guaranteed. Many orders have been transferred to China, resulting in a sharp increase in domestic orders. The terminal demand was better than expected, and the loom operating rate of Jiangsu and Zhejiang provinces rose sharply. According to statistics, as of October 29, the operating rate of Jiangsu and Zhejiang looms was 93.47%, up 18.75 percentage points from the end of September and 15.47 percentage points higher than the same period last year. However, the second outbreak of overseas epidemic, orders difficult to maintain, downstream purchase and sales back to light. Judging from the current maintenance plan, there is no new unit maintenance in the near future. Zhejiang Lvyu and wankai have plans to restart. The polyester start-up load in November will remain stable.
After the National Day holiday, the terminal orders increased rapidly, the positive transmission of industrial chain appeared from bottom to top, and the middle and lower reaches of the industry chain went to the warehouse obviously. But this situation did not last for a long time, since the end of October, polyester end to inventory rhythm slowed down. Data shows that as of November 5, the stock days of polyester staple fiber of Jiangsu and Zhejiang looms was 0.86 days, up 3.22 days compared with the previous Thursday; fdy18 days of polyester filament increased by 0.5 days compared with the previous week; and DTY of polyester filament was 27.5 days, which was the same as the previous week. The supply of imported goods decreased, and the inventory of ethylene glycol in East China port continued to be de stocked, but the total inventory was still significantly higher than that of the same period last year. According to Longzhong data, as of January 5, inventory of ports in East China totaled 1.1 million tons, down 10000 tons from Monday, 39800 tons from the previous Thursday, and higher than 509400 tons in the same period last year.
To sum up, on the one hand, the demand worries caused by the epidemic situation linger, and the crude oil uplink is weak, and the cost side is difficult to provide support. On the other hand, although the main port inventory is expected to continue to decline in the near future, new domestic units have gradually released capacity, and the supply increment is gradually reflected. However, the demand side lacks bright spot performance. Under the pressure of weak supply and demand pattern, the medium-term bear market pattern of ethylene glycol is difficult to change. In terms of operation, the short position of ethylene glycol was gradually allocated to 3650-3850 yuan / ton, with the maximum position of 30%. The target of decline was 3300-3350 yuan / ton, and the stop loss range was 3850-3900 yuan / ton.
Source: Chemical Network
