Ethylene glycol still ranks among the top losers. Although there are expectations for a supply reduction due to the shutdown of Jinshan Petrochemical’s ethylene glycol unit this week, coal prices have trended downward rapidly, causing EG’s valuation to be dragged down. On the 21st, the main stock fell 3.63% to close at 4,880 yuan.
The core driver that suppressed the ethylene glycol market in the early stage was port inventory. Yesterday’s data showed that the MEG port inventory in the main port area of East China was approximately 1.235 million tons. It further accumulated to a new high for the year, approaching the limit of storage capacity, becoming the biggest factor suppressing the market after removing costs.
Shanghai Petrochemical is a large-scale integrated refining and chemical enterprise, with a crude oil processing capacity of 16 million tons and numerous downstream chemical product production capacities. After the accident, the market sentiment and supply and demand level will bring a certain boost to the energy and chemical products that are actually affected. . However, it is worth noting that upstream ethylene, PX, polyolefin and other devices have not been damaged, and the shutdown time may be relatively limited. As for the two sets of ethylene glycol units themselves, they account for 2.7% of the national production capacity. However, the 1# 230,000-ton unit has basically been converted to EO production, and the 2# unit is producing MEG, with an initial operating load of about 40%. Although the current domestic supply of MEG is low and imports have increased month-on-month but are still at a low level, the overall inventory is currently high and supply and demand are in a weak balance.
However, affected by this incident, it is expected that ethylene glycol production companies will further increase their emphasis on environmental protection and safety. At the same time, the impact of the accident on the supply of ethylene oxide is more significant. The price increase caused by the short-term supply gap may stimulate more petroleum-based ethylene glycol units to switch to the production of ethylene oxide, which may intensify the phased supply of ethylene glycol. gap.
For ethylene glycol, before the accident, it was in the process of reducing inventory through production reduction under low profits, and the operating rate was in the stage of falling from a high level. In this case, even if the accident has a relatively slight impact on the operating rate of ethylene glycol, it may still have a strong emotional boost. On the other hand, the impact of the accident on the supply of ethylene oxide is more significant. The price increase caused by the short-term supply gap may stimulate more petroleum-based ethylene glycol units to switch to the production of ethylene oxide, which may intensify the Periodic supply gap. As the cost side is relatively weakly affected by oil prices, the short-term price of ethylene glycol may be stronger.
Everbright Futures believes that the supply and demand of ethylene glycol showed marginal improvement from June to August, and the price performance was relatively strong. However, with the process profits, especially the profits of the ethylene process, being significantly restored, it is worth paying attention to whether the stock supply will return in the later period. In the medium to long term, the surplus pattern is difficult to change, and the current inventory is still at a relatively high level. Under this situation, the market’s further upward drive is slightly insufficient.
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