After a “magnificent” rise in October, with the highest price reaching over 7,500 yuan/ton, the ethylene glycol futures price fluctuated all the way down to the 4,800-4,900 yuan/ton line; in the night trading on December 24, the main force of ethylene glycol Contract EG2205 closed at 4859 yuan/ton. Although the profits of oil and coal processes have been in the red recently, which provides some support for the cost side of ethylene glycol, under the influence of the overall weak supply and demand pattern, it is expected that ethylene glycol will continue to operate weakly under pressure in the later period.
The restart of the device leads to the recovery of ethylene glycol production
Since mid-December, many ethylene glycol units, including those in Inner Mongolia and South China, have restarted and resumed production. The ethylene glycol operating rate has also rebounded from a low level. Although the overall level is still low, due to the restart of some maintenance units in the later period, the ethylene glycol operating rate has also rebounded from a low level. Alcohol supply pressure is expected to continue to increase. On December 24, the comprehensive daily operating rate of ethylene glycol was 49.98%, an increase of 3.59 percentage points from the previous low and a decrease of 6.49 percentage points from the same period in 2020.
In 2022, domestic ethylene glycol will still be in the stage of capacity expansion. Judging from the current statistics, 13 new domestic devices with a total annual production capacity of 8.4 million tons are planned to be put into operation in 2022, of which approximately 2.8 million tons of new devices are planned to be put into operation in the first quarter of 2022, accounting for 13.62% of the total existing domestic production capacity. Although the commissioning time of some units may be delayed due to profit issues, as many units including Guangxi Huayi and Xinjiang Guanghui have completed commissioning and are waiting to be restarted, and units such as Zhejiang Petrochemical and Zhenhai Refining and Chemical are part of large refining and chemical projects. This part of the equipment has a high probability of being put into production, and the pressure for domestic ethylene glycol to be put into production will still be high in the future.
Terminal demand has not improved significantly yet
As the expected improvement in consumption during the “Golden Nine and Silver Ten” period failed, the demand performance of the terminal weaving market turned into a weak state. Entering December, the terminal market demand performance has still not improved significantly. The domestic market orders are missing, and although there are occasional overseas orders, the quantity is small. Affected by this, the loom start-up in Jiangsu and Zhejiang continues to remain low.
In the early stage of the COVID-19 epidemic in Jiangsu and Zhejiang, some looms were stopped under epidemic control measures. Due to the early Spring Festival holiday in 2022, some weaving companies chose to stop production and take holidays early due to the influence of multiple factors. Therefore, there may be further delays in the start-up of looms. decline. After the negative feedback from the terminal continues to be transmitted upward, polyester end production also faces downward pressure under the influence of weak demand and accumulated inventory pressure, and the overall demand for ethylene glycol is weak. On December 24, the daily operating load of looms in Jiangsu and Zhejiang was 61.84%, a decrease of 6.45 percentage points from the previous high, and a decrease of 14.81 percentage points from the same period in 2020; the daily operating load of polyester was 79.88%, a decrease of 4.03% from the previous high. percentage points, a decrease of 4.86 percentage points compared with the same period in 2020.
Port inventories continue to rise
Recently, there has been an increase in planned arrivals of ethylene glycol at East China ports. In the face of weak downstream market demand and no significant increase in port inventory outflows, ethylene glycol port inventories continued to accumulate in December. Although the absolute volume is still at a low level, the inventory pressure at ethylene glycol ports has still increased compared with the previous period.
According to statistics, as of December 20, ethylene glycol inventory at East China ports was 723,000 tons, an increase of 157,000 tons from the previous low, and a decrease of 112,000 tons from the same period in 2020.
On the supply side, the restart of early maintenance equipment has caused the start-up of the ethylene glycol supply side to rebound from the low level. Multiple new units are planned to be put into operation in early 2022, which puts great pressure on the ethylene glycol supply side. On the demand side, there is still no significant improvement in demand orders in the terminal market. Some weaving companies have started production shutdowns and holidays in advance. After negative feedback continues to be transmitted upward, the demand for ethylene glycol is weak; in terms of inventory, ethylene glycol inventory at chemical ports has continued to accumulate recently. Although the absolute volume is still low, the inventory pressure is compared with the previous period. Still improved.
Overall, we believe that although theoretical processing profits are still at a loss, which supports the cost side of ethylene glycol, negative factors in the supply and demand pattern are gradually accumulating, and there is still great pressure on ethylene glycol. It is expected that ethylene glycol will Weak operation under pressure.
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