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Ethylene: poor demand, running under pressure
2023/8/17
Recently, the ethylene market started to fluctuate upward after reaching a phased bottom of 6,000 yuan (ton price, the same below) in June, and the price rose by about 400 yuan. Looking at the market outlook, the short-term supply of ethylene is still expected to grow, and the positive effects of the downstream are limited, and the market continues to face obstacles.
supply expected to increase
Entering July, driven by good news such as the continued outsourcing of Shandong Luqing Plant and the start-up of Yuhuang Styrene Plant, the domestic ethylene market demand has increased significantly. Downstream users actively entered the market, and manufacturers shipped smoothly, bringing upward momentum to the ethylene market.
Cui Xiaofei, an analyst at Longzhong Information, said that after the middle and late July, Xinpu Chemical’s ethylene plant restarted, and a large number of products were exported. The high inventory of downstream raw materials lowered the willingness to receive ethylene. slow down.
Looking at the market outlook, after the restart of the supporting downstream equipment of Xinpu Chemical, the main delivery contracts will be the main ones in August, which will have no obvious impact on the ethylene spot market. In addition, there is an overhaul plan for Baolai Petrochemical's ethylene plant, but CNOOC Shell's cracker, Daqing Petrochemical and Lanzhou Petrochemical are expected to restart, and the impact of the increase in supply on the ethylene spot market is relatively limited. The export of Shenghong Refining's ethylene products may become a key factor affecting the domestic price in August. If its products are exported, the ethylene market will have the risk of falling.
From the perspective of import and export data, in the first half of the year, my country imported about 1.07 million tons of ethylene, an increase of 15.53% over the same period last year; the cumulative export of ethylene was about 123,300 tons, an increase of about 2.59% over last year. It can be seen from this that, compared with imported ethylene, both the quantity and the growth rate of export ethylene are much lower.
Looking at the external market, sellers tend to avoid fixed-price offers to control risks as industry players gradually become more worried about the market outlook. Although the downstream polyethylene (PE), styrene (SM), and ethylene glycol (EG) markets have risen, the overall trend is still volatile, which has not boosted the purchasing confidence of factories, and most buyers have completed stocking in August, and No rush to buy September ethylene.
With the recent weakening of shipping prices, the arbitrage window from the United States to Northeast Asia has opened again. It is expected that negotiations on ethylene cargoes from the United States will gradually increase in the later period, which will also put pressure on the domestic ethylene market.
The cost is upside down
Yang Yang, an analyst at Jinlianchuang, said that the ethylene raw material naphtha market first fell and then rose in July, and then rose rapidly after the middle of the month.
In early July, gasoline components were subject to consumption tax, and the market was relatively chaotic. But then the summer travel peak and the continuous rise of crude oil drove market sentiment, the refined oil market performed positively, and the terminal refinery reforming gap continued to be replenished, and the naphtha market took advantage of the opportunity to actively push up and out of the rapid rise. At the end of July, the profit of the market restructuring direction dropped significantly compared with the previous period, and the demand for ethylene cracking continued to weaken, and the market trading sentiment cooled down, showing a callback trend.
According to statistics, as of the end of July, the loss of naphtha-to-ethylene was US$160. Rising raw materials drive the ethylene market to go up, so the profit margin of ethylene remains stable and small.
Looking at the market outlook, international crude oil prices, as a guideline for chemical products, have remained relatively strong in the near future. After mid-March, the attitude of continued pressure has finally changed. The rise in international oil prices was mainly due to the easing of interest rate hike pressure and the improvement of some US economic data. Against the background of the overall weakening of economic pressure, the long-standing positive fundamentals have been highlighted, and international crude oil has entered a long-lost high price range.
Looking at the future market, if Saudi Arabia’s additional crude oil production cut of 1 million barrels per day is extended to September, and Russia will also implement an additional cut of 500,000 barrels per day from August, it will continue to support oil prices and drive the naphtha market . If the transmission of ethylene costs is not smooth, naphtha-based ethylene will continue to maintain a loss-making state.
The demand is limited
From the perspective of the terminal of the ethylene industry chain, the demand from the downstream of the four main forces is generally not strong. The overall operating rate of polyethylene downstream products and agricultural film is basically the same as that of the previous period; ethylene glycol is in a state of slight decline; the demand for the three major downstream sectors of styrene has declined; the operating conditions of polyvinyl chloride (PVC) product enterprises have not changed much, but exports have decreased.
Recently, the prices of many downstream products of ethylene in China have been passively rising, but most of the industry profits are still in a state of loss, which affects the enthusiasm of enterprises to start operations.
The sales staff of Jilin Petrochemical said that in terms of the market outlook, multiple sets of integrated ethylene plants will be restarted in a centralized manner, and the supporting ethylene crackers will start up simultaneously, and the demand side will steadily increase.
In addition, Daqing Petrochemical and Lanzhou Petrochemical's polyethylene plants are about to restart, and a set of satellite chemical ethylene glycol plant is shut down; in terms of styrene, it is expected that Dagu 500,000 tons/year, Lishide 210,000 tons/year, and Daqing 120,000 tons/year Annual, Huaxing 80,000 tons/year and Lanzhou HSBC, Lanzhou Petrochemical and other plants have entered into restart and recovery; Cangzhou Julong PVC plant has been shut down for maintenance. Overall, the demand in the domestic ethylene market has steadily increased, but all are based on integrated supporting facilities, and the demand in the spot market has not changed significantly.
Industry insiders are cautiously optimistic about the market outlook of ethylene. Although the cost aspect may have a driving effect on the ethylene market, but the demand side is in the off-season, it is difficult to increase the purchase of raw material ethylene, and the integrated operating rate increases, the competition in the downstream market of ethylene will intensify, and the ethylene spot market has insufficient upward momentum, or it can only be static Wait for the arrival of "Golden September and Silver October".
supply expected to increase
Entering July, driven by good news such as the continued outsourcing of Shandong Luqing Plant and the start-up of Yuhuang Styrene Plant, the domestic ethylene market demand has increased significantly. Downstream users actively entered the market, and manufacturers shipped smoothly, bringing upward momentum to the ethylene market.
Cui Xiaofei, an analyst at Longzhong Information, said that after the middle and late July, Xinpu Chemical’s ethylene plant restarted, and a large number of products were exported. The high inventory of downstream raw materials lowered the willingness to receive ethylene. slow down.
Looking at the market outlook, after the restart of the supporting downstream equipment of Xinpu Chemical, the main delivery contracts will be the main ones in August, which will have no obvious impact on the ethylene spot market. In addition, there is an overhaul plan for Baolai Petrochemical's ethylene plant, but CNOOC Shell's cracker, Daqing Petrochemical and Lanzhou Petrochemical are expected to restart, and the impact of the increase in supply on the ethylene spot market is relatively limited. The export of Shenghong Refining's ethylene products may become a key factor affecting the domestic price in August. If its products are exported, the ethylene market will have the risk of falling.
From the perspective of import and export data, in the first half of the year, my country imported about 1.07 million tons of ethylene, an increase of 15.53% over the same period last year; the cumulative export of ethylene was about 123,300 tons, an increase of about 2.59% over last year. It can be seen from this that, compared with imported ethylene, both the quantity and the growth rate of export ethylene are much lower.
Looking at the external market, sellers tend to avoid fixed-price offers to control risks as industry players gradually become more worried about the market outlook. Although the downstream polyethylene (PE), styrene (SM), and ethylene glycol (EG) markets have risen, the overall trend is still volatile, which has not boosted the purchasing confidence of factories, and most buyers have completed stocking in August, and No rush to buy September ethylene.
With the recent weakening of shipping prices, the arbitrage window from the United States to Northeast Asia has opened again. It is expected that negotiations on ethylene cargoes from the United States will gradually increase in the later period, which will also put pressure on the domestic ethylene market.
The cost is upside down
Yang Yang, an analyst at Jinlianchuang, said that the ethylene raw material naphtha market first fell and then rose in July, and then rose rapidly after the middle of the month.
In early July, gasoline components were subject to consumption tax, and the market was relatively chaotic. But then the summer travel peak and the continuous rise of crude oil drove market sentiment, the refined oil market performed positively, and the terminal refinery reforming gap continued to be replenished, and the naphtha market took advantage of the opportunity to actively push up and out of the rapid rise. At the end of July, the profit of the market restructuring direction dropped significantly compared with the previous period, and the demand for ethylene cracking continued to weaken, and the market trading sentiment cooled down, showing a callback trend.
According to statistics, as of the end of July, the loss of naphtha-to-ethylene was US$160. Rising raw materials drive the ethylene market to go up, so the profit margin of ethylene remains stable and small.
Looking at the market outlook, international crude oil prices, as a guideline for chemical products, have remained relatively strong in the near future. After mid-March, the attitude of continued pressure has finally changed. The rise in international oil prices was mainly due to the easing of interest rate hike pressure and the improvement of some US economic data. Against the background of the overall weakening of economic pressure, the long-standing positive fundamentals have been highlighted, and international crude oil has entered a long-lost high price range.
Looking at the future market, if Saudi Arabia’s additional crude oil production cut of 1 million barrels per day is extended to September, and Russia will also implement an additional cut of 500,000 barrels per day from August, it will continue to support oil prices and drive the naphtha market . If the transmission of ethylene costs is not smooth, naphtha-based ethylene will continue to maintain a loss-making state.
The demand is limited
From the perspective of the terminal of the ethylene industry chain, the demand from the downstream of the four main forces is generally not strong. The overall operating rate of polyethylene downstream products and agricultural film is basically the same as that of the previous period; ethylene glycol is in a state of slight decline; the demand for the three major downstream sectors of styrene has declined; the operating conditions of polyvinyl chloride (PVC) product enterprises have not changed much, but exports have decreased.
Recently, the prices of many downstream products of ethylene in China have been passively rising, but most of the industry profits are still in a state of loss, which affects the enthusiasm of enterprises to start operations.
The sales staff of Jilin Petrochemical said that in terms of the market outlook, multiple sets of integrated ethylene plants will be restarted in a centralized manner, and the supporting ethylene crackers will start up simultaneously, and the demand side will steadily increase.
In addition, Daqing Petrochemical and Lanzhou Petrochemical's polyethylene plants are about to restart, and a set of satellite chemical ethylene glycol plant is shut down; in terms of styrene, it is expected that Dagu 500,000 tons/year, Lishide 210,000 tons/year, and Daqing 120,000 tons/year Annual, Huaxing 80,000 tons/year and Lanzhou HSBC, Lanzhou Petrochemical and other plants have entered into restart and recovery; Cangzhou Julong PVC plant has been shut down for maintenance. Overall, the demand in the domestic ethylene market has steadily increased, but all are based on integrated supporting facilities, and the demand in the spot market has not changed significantly.
Industry insiders are cautiously optimistic about the market outlook of ethylene. Although the cost aspect may have a driving effect on the ethylene market, but the demand side is in the off-season, it is difficult to increase the purchase of raw material ethylene, and the integrated operating rate increases, the competition in the downstream market of ethylene will intensify, and the ethylene spot market has insufficient upward momentum, or it can only be static Wait for the arrival of "Golden September and Silver October".
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