Before and after the May Day holiday, ethylene glycol stopped falling and rebounded, driven by raw material costs, and the main contract returned to the 4,800 yuan/ton line. In the short term, we believe that due to the strong support from the cost side and the optimistic market sentiment caused by the warm operation of crude oil, ethylene glycol futures prices may be relatively warm, but there will still be great pressure for the commissioning of new equipment and the increase in imported supply in the future. , the mid- to long-term trend of ethylene glycol is still not optimistic.
Processing profits have been significantly compressed, and the cost side of ethylene glycol has strong support
With the continuous decline in ethylene glycol prices in March and the increase in raw material prices, ethylene glycol processing profits have been significantly compressed, with coal-to-ethylene glycol processing fees entering the negative range again since late April. As of April 30, the domestic CFR Japanese central price is 591 US dollars/ton. It is estimated that the domestic oil-to-ethylene glycol processing fee is about 40.26 yuan/ton, a significant decrease of 1,724.45 yuan/ton from the previous high, and 1,724.45 yuan/ton lower than the same period in 2020. A decrease of 908.14 yuan/ton; the average price of thermal coal at major domestic ports is 772 yuan/ton. It is estimated that the domestic coal-to-ethylene glycol processing fee is about -508.6 yuan/ton, a significant decrease of 2468.8 yuan/ton from the previous high, and 2,468.8 yuan/ton lower than the previous high. In the same period of 2020, it increased by 279.8 yuan/ton.
Although competition among enterprises intensifies when production capacity is expanded, it is a high probability that the processing profits of enterprises will be compressed. However, if the ethylene glycol processing fee remains in the negative range for a long time, the enterprise will be in a negative range. The willingness to continue production due to normal operations will be significantly reduced, and domestic ethylene glycol supply will shrink as a result, thereby pushing up ethylene glycol prices and rebalancing the ethylene glycol supply and demand pattern. While international oil prices are still showing a strong and volatile trend, we believe that there is limited room for further compression of domestic ethylene glycol processing fees, and domestic ethylene glycol will therefore receive strong cost-side support.
Equipment maintenance and restart coexist, and the pressure on the supply end is still high in the later period
In 2021, the pace of major expansion of domestic ethylene glycol production capacity will continue. New devices with an annual production capacity of nearly 6 million tons/year are planned to be put into operation throughout the year, and most of the new devices will be put into operation in the first half of the year. According to the plan, Hubei Sanning, Satellite Petrochemical and Zhejiang Petrochemical Phase II ethylene glycol plants will be put into operation from April to May. Among them, Satellite Petrochemical and Zhejiang Petrochemical Phase II are both large-scale devices with an annual production capacity of more than 1.5 million tons; currently Satellite Petrochemical The start-up of the first-phase device is progressing smoothly and the load is gradually increasing. It is expected to steadily supply contract customers starting from May, and the remaining devices will most likely be put into operation in May. If all production plans are launched as scheduled, the effective annual domestic ethylene glycol production capacity will increase to 20.042 million tons by the end of May, a significant increase of 27.64 percentage points from the end of 2020.
May is the traditional maintenance season for domestic ethylene glycol plants, which are currently known to include Shandong Lihuayi, Henan Energy Yongcheng, Qianxi Coal Chemical Industry, Xinjiang Tianye, and Xinjiang Tianye Ying and other coal-making equipment with a total capacity of 1.1 million tons/year will be shut down for maintenance. Sinopec Zhenhai Refining and Shanghai Petrochemical and other equipment will also perform annual maintenance. During the same period, three sets of Xinhang Energy, Anhui Red Sifang and Inner Mongolia Rongxin plants with a total capacity of 1.06 million tons/year are planned to restart. Most of the supply shrinkage caused by domestic plant maintenance in May has been offset, coupled with the addition of new plants The increase in supply brought about by the start of production will still put pressure on the domestic ethylene glycol supply side in the later period.
Imported cargo will increase, and port inventory may enter the accumulation stage
With the unexpected shutdown of equipment in the United States restarting production and the completion of maintenance of ethylene glycol equipment in other overseas countries and regions, domestic ethylene glycol import shipments are expected to increase significantly. In late April, ethylene glycol is scheduled to arrive at East China ports. The port cargo volume has been at a high level of more than 200,000 tons for two consecutive weeks. As the polyester load faces downward pressure, the demand for ethylene glycol may decline. This will also make it difficult for the supply of ethylene glycol ports to maintain the previous level. In the case of expectations for an increase in cargo arrivals, ethylene glycol will Port inventories are expected to enter the accumulation stage. As of May 6, the total inventory of ethylene glycol in East China ports was 546,900 tons, an increase of 28,400 tons from the previous week and a decrease of 513,400 tons from the same period in 2020.
Summary
In the short term, due to limited space for further compression of processing fees, cost-side changes will become the main factor affecting the trend of ethylene glycol. With international oil prices on the warm side and domestic With coal prices continuing to rise, ethylene glycol is expected to rebound. From a mid- to long-term perspective, there is still a large amount of new domestic ethylene glycol production capacity, coupled with expectations for an increase in imported cargoes, the pressure on the supply side of ethylene glycol will be greater in the later period. In the absence of new favorable factors on the demand side, ethylene glycol will The supply and demand performance of alcohol is expected to be weak, and the futures price trend is still not optimistic. Given that the current cost side of ethylene glycol is inversely related to supply and demand, we…��It is recommended that investors operate with caution and focus on changes in ethylene glycol processing fees in the near future. </p
