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The market trend is still unspeakably optimistic, and the rise of ethylene glycol may be short-lived
2023/7/18
At the end of June, driven by costs, the price of ethylene glycol turned up from the low point of the year and rose by 1.14% in just one week. According to SunSirs data, the current market price of ethylene glycol is 4,000 yuan (ton price, the same below).
"As the 750,000-ton/year unit of a large factory in Zhejiang is scheduled to restart at the end of the month, and some units have increased their load, the output of ethylene glycol has increased to a certain extent, and the amount of goods arriving at the port has increased, and the port may still accumulate storage." The glycol market has seen a slight pick-up, but according to industry insiders such as Chu Xiaoli, an analyst at Jinlianchuang Chemicals, under the fundamentals of loose supply and demand, the recent trend of the glycol market is still hard to say optimistic, and the current upward trend may be short-lived.
Bouncing off the lows of the year
In the first half of the year, the market of ethylene glycol showed a low and volatile trend. From the 4408 yuan line at the end of January, it has been fluctuating and fell to the yearly low of 3955 yuan at the end of June, a drop of about 18.35%.
For the recent market, Chu Xiaoli believes that from the supply side, a 900,000-ton/year ethylene glycol plant in Lianyungang, Jiangsu, started up around the Dragon Boat Festival, Hainan Refining & Chemical’s 800,000-ton/year plant started up, and a large Zhejiang plant started up 800,000-ton The ton/year device restarted, and the port accumulated to 970,300 tons, and the supply side is expected to increase significantly.
From the perspective of demand, although the operating rate of downstream polyester continues to rise to around 90%, which is at a relatively high level this year, and the recent promotional inventory of polyester factories is not high, but because the demand for polyester is currently in the off-season, the overall buying momentum is weak, and more The whole market still lacks substantial positive support. Loose supply and demand lead to continued weakness in the ethylene glycol market.
At the beginning of July, due to the bottoming out of coal and ethylene prices, some support was given to the price of ethylene glycol on the cost side. In July, crude oil inventories fell, superimposed high temperature weather boosted energy prices, and oil prices continued to rebound. At the same time, domestic macro policy expectations are still in place. These also support the upward trend of the ethylene glycol market to a certain extent.
supply expected to increase
Chen Zhen, an analyst at COFCO Futures, and other industry insiders believe that loose supply on the short-term side will be the dominant factor in the later trend of ethylene glycol.
Chen Zhen pointed out in the research report that ethylene glycol can be said to be the product with the largest new production capacity in the domestic chemical market in the near future, which has caused the supply and demand pattern of ethylene glycol to quickly turn to excess. In recent years, the pressure of overcapacity has always shrouded Ethylene Glycol Market. After three years of supply increase, the social inventory of ethylene glycol has also reached a high level, and the ethylene glycol market is in a weak position most of the time, which is also reasonable.
"In June this year, the supply of ethylene glycol appeared to be loose again." Chen Zhen introduced that, on the one hand, under the situation of weak new construction in the real estate industry, cement production continued to be low, and cement-related water reducers were based on ethylene oxide. The largest downstream, resulting in weak demand for ethylene oxide. At the same time, the production of ethylene oxide as a hazardous chemical was limited under the high temperature this summer, and some ethylene oxide and ethylene glycol integrated devices were converted to ethylene glycol, resulting in an increase in ethylene glycol production. On the other hand, with the fall of domestic coal prices, the supply of raw materials for coal-to-ethylene glycol units is gradually sufficient, and the operating rate has reached a new high in the past two years. On the contrary, the operating rate of the diol plant has risen against the seasonal trend.
Looking at the market outlook, the loose supply situation may continue. The 750,000-ton/year ethylene glycol plant of a large factory in Zhejiang restarted at the end of June, and the load of some devices was increased after maintenance, and the output is expected to increase. There is a high probability that ethylene glycol will accumulate.
Demand remains weak
The pressure on the supply of polyester has gradually increased in the near future, and the timing and strength of the polyester negative reduction will also exceed market expectations. The downward pressure in the field of terminal demand has increased, and the superposition of late rainy days and high temperature weather in summer will also cause a drag on the downstream start of ethylene glycol.
The energy and chemical research team of the Mid-term Research Institute believes that both domestic sales and exports will face significant pressure from June to August. After entering June, the speculative demand and rigid demand for raw materials of polyester downstream terminals are declining, and most enterprises mainly consume and stock up.
The team predicted that foreign trade orders are not expected to improve significantly for the time being, and the destocking cycle may be longer than market expectations. Therefore, there is still obvious downward pressure on foreign trade exports in the second and third quarters, and opportunities for improvement will not appear until at least the fourth quarter.
In terms of domestic demand, after the concentrated release of the backlog of demand in the first quarter, the slope of the chain recovery of domestic and foreign demand will tend to ease in the second quarter. However, as textiles and clothing are relatively seasonal consumer goods, the domestic demand for autumn and winter clothing is expected to start from September to October, and may even be postponed to October. There is no improvement in the short term. In addition, a large amount of new production capacity of polyester bottle flakes will be launched, which will also bring greater pressure on the bottle flakes industry in the future, and the industry will reduce negative expectations.
"As the 750,000-ton/year unit of a large factory in Zhejiang is scheduled to restart at the end of the month, and some units have increased their load, the output of ethylene glycol has increased to a certain extent, and the amount of goods arriving at the port has increased, and the port may still accumulate storage." The glycol market has seen a slight pick-up, but according to industry insiders such as Chu Xiaoli, an analyst at Jinlianchuang Chemicals, under the fundamentals of loose supply and demand, the recent trend of the glycol market is still hard to say optimistic, and the current upward trend may be short-lived.
Bouncing off the lows of the year
In the first half of the year, the market of ethylene glycol showed a low and volatile trend. From the 4408 yuan line at the end of January, it has been fluctuating and fell to the yearly low of 3955 yuan at the end of June, a drop of about 18.35%.
For the recent market, Chu Xiaoli believes that from the supply side, a 900,000-ton/year ethylene glycol plant in Lianyungang, Jiangsu, started up around the Dragon Boat Festival, Hainan Refining & Chemical’s 800,000-ton/year plant started up, and a large Zhejiang plant started up 800,000-ton The ton/year device restarted, and the port accumulated to 970,300 tons, and the supply side is expected to increase significantly.
From the perspective of demand, although the operating rate of downstream polyester continues to rise to around 90%, which is at a relatively high level this year, and the recent promotional inventory of polyester factories is not high, but because the demand for polyester is currently in the off-season, the overall buying momentum is weak, and more The whole market still lacks substantial positive support. Loose supply and demand lead to continued weakness in the ethylene glycol market.
At the beginning of July, due to the bottoming out of coal and ethylene prices, some support was given to the price of ethylene glycol on the cost side. In July, crude oil inventories fell, superimposed high temperature weather boosted energy prices, and oil prices continued to rebound. At the same time, domestic macro policy expectations are still in place. These also support the upward trend of the ethylene glycol market to a certain extent.
supply expected to increase
Chen Zhen, an analyst at COFCO Futures, and other industry insiders believe that loose supply on the short-term side will be the dominant factor in the later trend of ethylene glycol.
Chen Zhen pointed out in the research report that ethylene glycol can be said to be the product with the largest new production capacity in the domestic chemical market in the near future, which has caused the supply and demand pattern of ethylene glycol to quickly turn to excess. In recent years, the pressure of overcapacity has always shrouded Ethylene Glycol Market. After three years of supply increase, the social inventory of ethylene glycol has also reached a high level, and the ethylene glycol market is in a weak position most of the time, which is also reasonable.
"In June this year, the supply of ethylene glycol appeared to be loose again." Chen Zhen introduced that, on the one hand, under the situation of weak new construction in the real estate industry, cement production continued to be low, and cement-related water reducers were based on ethylene oxide. The largest downstream, resulting in weak demand for ethylene oxide. At the same time, the production of ethylene oxide as a hazardous chemical was limited under the high temperature this summer, and some ethylene oxide and ethylene glycol integrated devices were converted to ethylene glycol, resulting in an increase in ethylene glycol production. On the other hand, with the fall of domestic coal prices, the supply of raw materials for coal-to-ethylene glycol units is gradually sufficient, and the operating rate has reached a new high in the past two years. On the contrary, the operating rate of the diol plant has risen against the seasonal trend.
Looking at the market outlook, the loose supply situation may continue. The 750,000-ton/year ethylene glycol plant of a large factory in Zhejiang restarted at the end of June, and the load of some devices was increased after maintenance, and the output is expected to increase. There is a high probability that ethylene glycol will accumulate.
Demand remains weak
The pressure on the supply of polyester has gradually increased in the near future, and the timing and strength of the polyester negative reduction will also exceed market expectations. The downward pressure in the field of terminal demand has increased, and the superposition of late rainy days and high temperature weather in summer will also cause a drag on the downstream start of ethylene glycol.
The energy and chemical research team of the Mid-term Research Institute believes that both domestic sales and exports will face significant pressure from June to August. After entering June, the speculative demand and rigid demand for raw materials of polyester downstream terminals are declining, and most enterprises mainly consume and stock up.
The team predicted that foreign trade orders are not expected to improve significantly for the time being, and the destocking cycle may be longer than market expectations. Therefore, there is still obvious downward pressure on foreign trade exports in the second and third quarters, and opportunities for improvement will not appear until at least the fourth quarter.
In terms of domestic demand, after the concentrated release of the backlog of demand in the first quarter, the slope of the chain recovery of domestic and foreign demand will tend to ease in the second quarter. However, as textiles and clothing are relatively seasonal consumer goods, the domestic demand for autumn and winter clothing is expected to start from September to October, and may even be postponed to October. There is no improvement in the short term. In addition, a large amount of new production capacity of polyester bottle flakes will be launched, which will also bring greater pressure on the bottle flakes industry in the future, and the industry will reduce negative expectations.
In short, the conversion of ethylene glycol maintenance and production is coming to an end, the production capacity lost from maintenance is gradually returning, and the market supply will gradually increase. Downstream polyester factories are mainly based on rigid demand, and there is still a possibility of reducing the burden. The fundamentals of ethylene glycol will gradually turn to the accumulation pattern. It is expected that the ethylene glycol market will operate weakly in the short term.
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