Affected by the recent plunge in international oil prices, ethylene glycol futures prices have continued to fall. Looking ahead, we believe that in the short term, under the influence of the supply and demand mismatch caused by the boost in the traditional peak season in the downstream and the low start of construction, the overall trend of ethylene glycol will be warmer, but in the medium and long term, due to the greater pressure of capacity expansion and demand in the later period The performance is difficult to further improve, and ethylene glycol is still running weakly.
As the price of ethylene glycol continues to rise recently, the processing profit of enterprises has rebounded, and the willingness to restart production has increased. At the end of August, many domestic coal-to-ethylene glycol plants were restarted, but the overall start-up of ethylene glycol was temporarily at a low level. On September 9, the domestic ethylene glycol comprehensive daily operating rate was 59.61%, an increase of 7.8% from the previous low, but there was still a 2.27% gap compared with the same period in 2019.
The terminal demand in the peak season has increased, but the continuity in the later period is doubtful. In addition to the resumption of the preliminary maintenance device, the recent domestic ethylene glycol production pressure is also relatively high. According to the plan, domestic ethylene glycol will add 1.45 million tons of ethylene glycol in September, and the domestic ethylene glycol will increase its annual production capacity to 15.162 million tons. In the fourth quarter of this year, about 2.5 million tons/year of new equipment will be put into operation. If the production plan progresses If it goes well, the domestic ethylene glycol production capacity will reach 17.612 million tons at the end of 2020, which is a significant increase of more than 60% over the same period in 2019. The domestic ethylene glycol supply is expected to increase significantly in the later period.
After entering the traditional peak season of "Golden Nine and Silver Ten", the start of the loom has risen to the highest level during the year, and the start of the polyester plant has also remained at a high level. On September 8, the comprehensive daily operating rate of domestic polyester was 88.16%, a decrease of 2.05% from the same period in 2019; the daily operating load of looms in Jiangsu and Zhejiang was 69.5%, a decrease of 10.5% from the same period in 2019, but was significantly lower than the previous low An increase of 14%.
At the end of August, many ethylene glycol plants in the United States were affected by hurricanes and their shutdown time was extended. Domestic ethylene glycol imports declined. The opening of the ethylene glycol arbitrage window in Europe and America also attracted a portion of ethylene glycol to the European and American markets. Alcohol port stocks were continuously destocked in August. Despite this, the inventory of ethylene glycol in East China ports is still at a high level near 1.4 million tons, and the total demand for ethylene glycol in the European and American markets is limited. Therefore, the opening time of the arbitrage window is relatively short, and the high inventory pressure of domestic ethylene glycol is difficult to achieve in a short time. Significant relief. As of September 7, the ethylene glycol inventory at East China ports was 1.4 million tons, a significant increase of 603,700 tons over the same period in 2019.
To sum up, the traditional peak consumption season of "Golden Nine and Silver Ten" has boosted the demand for ethylene glycol, and the domestic ethylene glycol plant has not fully recovered, so there is a certain mismatch of ethylene glycol supply and demand. In the short term, the trend of ethylene glycol will be warmer. But the price increase may be limited. In the medium and long term, the restart of the plant and the commissioning of new production capacity have significantly increased the supply of ethylene glycol. However, when the demand has not fully recovered in the terminal foreign trade market, it is likely to weaken in the later period, which will cause the contradiction between the supply and demand of ethylene glycol. Intensified again, coupled with the difficulty of significant improvement in port inventory pressure in a short period of time, the ethylene glycol material is mainly operating weakly.
Source: Chemical Network
