Introduction: Recently, after the sharp correction of international crude oil, the rebound has been weak, but it is still at a high level of more than 70 US dollars per barrel; national coal production has increased significantly, and demand continues to fall. The coal supply of power plants has exceeded coal consumption, so coal-to-ethylene glycol The price of the required raw materials has dropped slightly to around 60 yuan/ton, but is still at a high level of more than 1,000 yuan/ton. To sum up, the production costs of ethylene glycol companies remain high, and most of them are in a state of loss. Downstream polyester companies have also stated that they will limit production quotations, and demand has begun to fall. This has really made matters worse. In order to ensure shipments, ethylene glycol companies have no choice but to Bear the pain and fall.
Figure 1 Domestic ethylene glycol market price trend chart
Source: Longzhong Information
Last week, East China ethylene glycol surged briefly and then fell quickly. The spot price is as high as 5,540 yuan/ton and as low as 5,230 yuan/ton. Terminal demand has been sluggish since August, the production and sales of downstream polyester companies have been sluggish, the inventory pressure of companies has been increasing, and some varieties have continued to suffer cash flow losses. Recently, there have been constant news of production cuts in the market. Several major polyester manufacturers have begun negotiations and are preparing to launch. Major manufacturers Driven by the situation, other domestic companies with relatively high inventories will also follow up and reduce production. The demand side is expected to be pessimistic. Despite the impact of the public health incident, the unloading of imported ethylene glycol was blocked last week, and port inventories were low and maintained a destocking trend. New production capacity will continue to be released in the future, and the regular maintenance season is coming to an end. The supply increase is expected to be obvious, which is negative. The mentality of market players. Although production costs remain high, companies can only bear the pain of falling prices to ensure shipments, stimulating downstream buyers to buy low-priced goods.
Figure 2 Domestic downstream polyester operating rate change forecast trend chart
Source: Longzhong Information
According to Longzhong’s understanding, domestic mainstream polyester factories Tongkun and Xinfengming will start operations next week , Hengyi, and Tiansheng all plan to reduce production by approximately 20%, with a total production reduction of approximately 4 million tons, and the recovery time is yet to be determined. The output of the domestic polyester industry will decline significantly, and we will continue to pay close attention to this. It is expected that next week (20210813-0819) the output of the polyester industry will be at the level of 1.09-1.1 million tons, and the load will be below 86%. Later, small and medium-sized enterprises will follow up, and the load may be reduced to around 83%.
Figure 3 Domestic ethylene glycol port inventory comparison chart
Source: Longzhong Information
According to Longzhong statistics, as of August 12, the total inventory of MEG ports in the main port area of East China was 47.14 million tons, port inventories have fallen for six consecutive weeks. In detail: Zhangjiagang 168,000 tons, Taicang 89,000 tons, Ningbo 20,000 tons; Jiangyin and Changzhou 120,000 tons, Shanghai and Changshu 74,400 tons. Recently, mainly due to typhoon “fireworks” and public health incidents that have affected the unloading of foreign ships, port inventories continue to be destocked. Later, as unloading resumes and foreign maintenance equipment restarts, import inventory is expected to increase.
To sum up: the domestic ethylene glycol main port inventory has not yet accumulated, and it will take some time for the accumulation of inventory to occur. Therefore, in the short term, The probability of falling below the box shock range and forming a downward trend is not high. However, due to the increase in new production capacity in the future, the weakening of cost support but still at a high level, and the impact of downstream polyester factories limiting production to protect prices, there is little room for improvement. Longzhong Information predicts that the spot market may operate in the 5200-5350 range in the near future. </p
