“Coal” is over!
In early trading on the 22nd, the main thermal coal contract fell by more than 9%. During the period, the intraday decline expanded to 14%, to 1,365 yuan/ton. This is the third consecutive day that thermal coal has dropped by the limit. It fell by the limit in the previous two days! If the limit continues to fall today, according to relevant trading rules, if thermal coal futures fall to the limit for three consecutive trading days, the exchange will take further risk control measures, including suspending trading for one day.
And all this stems from October 19, a historic day for China’s coal sector.
On the 19th, at the special meeting on ensuring coal supply in the fourth quarter in Yulin, it was requested that the market price of coal in the main coal-producing areas of Shanxi, Shaanxi and Inner Mongolia be reduced by 100 yuan/ton on the existing basis. At the meeting, Yulin Mayor Zhang Shengli proposed that all state-owned enterprises in Yu take the lead in reducing prices by 100 yuan/ton. Prices for enterprises that have signed long-term agreements to guarantee supply should not exceed 1,200 yuan/ton, and private enterprises should not exceed 1,500 yuan/ton.
On the evening of the same day, the National Development and Reform Commission issued three consecutive articles focusing on the issue of ensuring supply and stable price of coal, implementing intervention measures on coal prices, and hitting a heavy “combination punch”.
After that, the market sentiment changed and the pessimistic atmosphere spread. The previous “coal crazy” market atmosphere cooled down instantly. The “three brothers” of coal took the lead in the decline. A total of 39 contracts fell by the limit that day. , ethylene glycol is also among them.
After the National Day holiday, the ethylene glycol market price has been full of surprises, and the price has reached a new high again point, the spot price rose to a new high of 7,400 yuan/ton for the year. Under the continuous carnival market, the recent rise in the domestic ethylene glycol market mainly comes from the linkage of kerosene, and the decline is also due to policy reasons. Coal prices are expected to be lowered, and cost support expectations are weakened. The recent decline in ethylene glycol prices has returned to rationality.
Supply is tight, and the industry leader has announced a suspension of production!
Recently, domestic coal prices have fluctuated, putting huge production pressure on domestic coal chemical companies.
On the evening of October 19, Danhua Technology (600844.SH) announced that the supply of raw coal at the location of its holding subsidiary Tongliao Jinmei has been tight recently and it has been difficult to maintain its normal load production. , therefore decided to stop the production of ethylene glycol from October 20, and only retain the normal production of oxalic acid. In this regard, relevant company personnel told reporters from the Financial Associated Press that this will have a greater impact on the company’s revenue in the fourth quarter. The company’s products are mainly supplied to some polyester companies in the south. This shutdown will put pressure on the raw material supply of these companies.
According to the reporter’s understanding, Tongliao Gold Coal is an important subsidiary of the listed company Danhua Technology. Public information shows that Tongliao Gold and Coal is a joint venture established by Danhua Technology, the Chinese Academy of Sciences, and Shanghai Gold and Coal Holdings, with Danhua Technology holding 76.77% of the shares.
At the production and operation level, Tongliao Gold Coal uses lignite as raw material, uses large chemical equipment to produce ethylene glycol and co-produces oxalic acid.
Financial reports show that Tongliao Jinmei’s designed production capacity is to produce 220,000 tons of ethylene glycol and 80,000 tons of oxalic acid annually. Among them, ethylene glycol is the main product. In 2020, the output of ethylene glycol products was 153,200 tons, achieving operating income of 474 million yuan, accounting for 44.04% of the listed company’s overall revenue. In the first half of 2021, Tongliao Gold Coal produced a total of 76,600 tons of ethylene glycol and 52,200 tons of oxalic acid.
The shutdown of Tongliao Gold Coal is just a microcosm of the ethylene glycol industry. According to a reporter from the Associated Press, as of September 2021, the annual domestic coal-to-ethylene glycol production capacity is 7.25 million tons. However, due to insufficient coal supply, the operating rate of domestic ethylene glycol companies is very low.
Wang Ping, an industry analyst at Longzhong Information, told a reporter from the Associated Press that from the perspective of production capacity, Danhua Technology’s suspension of production will have little impact on the domestic supply of ethylene glycol. It’s pretty big. In fact, the current operating rate of domestic coal-to-ethylene glycol plants is only about 30%, a 16% decrease from the same period last year, and 70% are out of production, which has a relatively large impact on the supply of ethylene glycol.
It is worth noting that judging from the current situation, it is difficult to resume operation of the coal-to-ethylene glycol unit. A relevant person from Danhua Technology told a reporter from the Financial Associated Press, “We still don’t know when the coal supply will be restored, so the company has no specific timetable for the resumption of the coal-to-ethylene glycol unit.”
Today, under the weak supply and demand situation
Ethylene glycol and How will the polyester market outlook perform?
The recent theme of the ethylene glycol market is the price increase cycle driven by coal. After continuously breaking through the 7,000 mark, the market’s long-short differences further intensified. What worries the industry is that real-time port inventory has been slowly increasing recently, and the scale of polyester production restrictions may intensify, and the industry will not keep up with the continuous increase. However, judging from the current prices, the main contradiction in the current market is cost when the cycle is king. . In addition, from a realistic perspective, after the market experienced the embarrassing reality that new equipment was expected to be put into production in the first year, but the actual implementation is still open to question, and the actual contribution rate of existing equipment is low, the market has a more rational understanding and calculation of the balance of supply and demand. Judging from the current supply and demand expectations, social inventories are expected to accumulate from November to December, but the extent of the accumulation should be cautious and is estimated to hover around 100,000.
However, the market has reached this point, and the market’s bullish sentiment hasAt the same time as the leakage, risks are gradually brewing. Although crude oil and coal remain strong at present, judging from the current profit level of ethylene glycol plants, the current profit level of the petroleum integrated unit is already US$170/ton. Against this background, E The high production capacity and low start-up status of diol in the early stage may be significantly improved. The supply side may be under certain pressure.
To sum up, after the sharp retracement of domestic ethylene glycol this week, the cost side may once again form support for the market, and we need to pay close attention to Pay attention to the reduced implementation of thermal coal. In terms of supply and demand, port inventories have accumulated this week, and there are relatively more arrivals in the later period. The supply side is slightly under pressure. On the demand side, the main polyester downstream maintains a comprehensive operating rate of around 78%, with little change. Supply and demand maintain a tight balance, so the short-term Time will mainly depend on the shock adjustment of ethylene glycol, and the room for continued decline depends on the extent of cost reduction.
From the perspective of the polyester market, due to the impact of power restrictions, the operating rate continues to be low. According to monitoring, the current polyester operating rate is 76.75%, which is at the lowest level during the year. Starting level. Therefore, the current support for the rise comes from the continued rise in upstream costs in the future. When the upward trend starts, the market still has room for inertia to rise. However, at the same time, once the rising momentum of upstream raw materials is curbed, the market will return to the supply and demand side. Logically, there is a risk of a sharp market retracement.
</p
