Chemical futures rebounded from the bottom on July 4, but ethylene glycol was still weak. In the morning, it hit a new low of 4,313 yuan for the new year. In the afternoon, it pared its losses and closed at 4,409 yuan, down 1.23%. PTA gained momentum in the afternoon and closed at 6,508 yuan, up 2.26%.
PTA’s own supply and demand are acceptable and circulation is tight. As the price fell, some buying was once again stimulated. The basis strengthened to a stage high last Friday.
Although the recent trend of international crude oil remains strong, coal prices are expected to weaken. However, ethylene glycol has fallen this time, and the logic of supply and demand has played a major role. Due to its poor supply and demand logic, it has become an empty product.
Although production profits are poor and the capacity utilization rate is not high in the first half of the year, the large production capacity base leads to high output. In terms of import volume, the start-up of Taiwan’s South Asia equipment remains at a historically low level, and the load of South Korea and Japan’s equipment is low. The import volume in the first half of the year has declined to a certain extent compared with last year, but the overall decline is limited. From July to August, the maintenance and restart of ethylene glycol inventory equipment parallel.
According to current statistics, due to the late-stage maintenance of coal chemical plants, because some devices have not been operating at full capacity, and the restart of some early-stage maintenance equipment is expected, Longzhong Information predicts a slight growth in the supply side next month.
What is important is that ethylene glycol plants have suffered losses for nearly 7-8 months. As prices continue to decline, the number of production cuts due to efficiency reasons has increased, and the supply structure may change in the future.
It’s hard to expect anything in terms of demand. The raw material inventory of polyester factories is relatively abundant. Recently, factories have been less enthusiastic about buying goods and want to increase joint production reduction efforts. As a result, the spot price of ethylene glycol was weak, as inventory in the main port continued to accumulate, reaching a new high in 20 months. At the same time, it is difficult to improve the delivery level, and it will still take time to eliminate inventory.
At present, the valuation of ethylene glycol has dropped to near the previous low again. In the later period, the market will reverse the decline and repair the valuation, which mainly requires an improvement in the supply and demand situation. However, Longzhong Information believes that the weak structure of EG is still difficult to change.
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