After the Spring Festival, the main ethylene glycol 2305 contract fell from the pre-holiday high of 4516 yuan/ton to 4090 yuan/ton due to negative factors. Starting from early February, due to the gradual recovery of downstream demand, the start-up of short fiber at the weaving end gradually rebounded, and the price of ethylene glycol rose to around 4,300 yuan/ton. At present, the domestic ethylene glycol production capacity utilization rate is about 53.00%, of which the integrated unit production capacity utilization rate is 57.58%, the coal-to-ethylene glycol production capacity utilization rate is 45.14%, and the downstream polyester production capacity utilization rate is 76.33%. From the perspective of supply and demand data, the domestic production on the supply side has increased slightly, but the import volume has declined, and the total supply has decreased. On the demand side, there is still some room for growth in polyester production, and the supply and demand side is bullish. The inventory of ethylene glycol in the main port of East China is 1.021 million tons, which is in a narrow destocking stage. The profit of the integrated industry is -219.64 US dollars/ton, a month-on-month decrease of 13.41%.
The surplus pattern is difficult to change
In January, the domestic ethylene glycol device production capacity base remained at 25.091 million tons, of which the coal-to-ethylene glycol production capacity base was 9.25 million tons and the non-coal-to-ethylene glycol production capacity base was 15.841 million tons. A total of 19 ethylene glycol units were overhauled in January, involving a production capacity of 6.35 million tons/year. Units such as Shenghong Petrochemical, Satellite Petrochemical, and Zhenhai Refining and Chemical were out of service for short periods of time. The total loss during the month was 281,900 tons. In January, my country’s ethylene glycol plant output was 1.2168 million tons, a decrease of 14,600 tons from the previous month, but an increase of 110,000 tons from January last year.
At present, the profit performance of ethylene glycol is still poor, with upstream factories experiencing significant losses. The loss per ton of ethylene glycol produced from naphtha is US$211, equivalent to RMB 1,400-1,800. Zhenhai Refinery’s 650,000 tons/year ethylene glycol unit plans to shut down for maintenance in early March and resume work around May 10. Fude Energy’s 500,000 tons/year ethylene glycol unit will be shut down for maintenance on February 19, which is expected to last about 10 days. Hainan Refinery’s new 800,000 tons/year ethylene glycol unit has been successfully put into use with oxygen, and the current load of the 1.8 million tons/year ethylene glycol unit of Shaanxi Coal Group Yulin Chemical Co., Ltd. has been reduced to 60%-70%. Overall, the starting load of ethylene glycol in February has been increased and stabilized at around 53%.
In terms of inventory, the current port inventory is around 1.02 million tons, which is slower than before the holiday. Although there has been a month-on-month improvement in the downstream sector of ethylene glycol since the third quarter of last year, port shipments are still sluggish, and Shenghong Hainan’s large-scale refining and chemical equipment was still put into operation in the first quarter. Although Hengli Petrochemical will support EO and Satellite Petrochemical will support benzene For ethylene, the production of ethylene glycol will be moderately reduced to achieve profit balance, but the progress of production reduction still needs to be observed.
Imports remain low
From January to December 2022, my country’s ethylene glycol imports totaled 7.5109 million tons, a year-on-year decrease of 10.86%. In December 2022, my country’s ethylene glycol import volume was 554,000 tons, a month-on-month increase of 1.41%; the export volume was 1,900 tons, a month-on-month decrease of 44.12%. The main reason for the fluctuations in imports and exports is that overseas supply remains stable, mostly due to contract execution, and the overall import volume has not changed much. The main importing countries that increased ethylene glycol imports were Saudi Arabia, the United States, and Canada, and the main importing countries that decreased imports were Singapore, Japan, and South Korea. The crowding out effect was obvious. At present, due to serious losses in peripheral devices, US dollar contract negotiations are difficult. Most of them use spot as the main trading method, and the contract volume has been significantly reduced. Investors are advised to pay attention to the progress of contract negotiations and the tightness of logistics capacity.
Downstream improvement is not obvious
At present, the polyester operating rate has risen to around 75%, and the chemical fiber weaving operating rate in Jiangsu and Zhejiang has increased to around 45.77%. After mid-February, most non-local workers returned to work, and the overall operating rate of the weaving industry has increased. However, the current domestic and foreign new orders are not as expected, and new orders for domestic trade in spring and summer are expected to be issued at the end of this month or early next month. Therefore, in the near future, factories Internal production enthusiasm is low. It is reported that a small number of spring and summer sample orders have been issued one after another. However, profits are meager and companies are not willing to accept orders. Due to the average supply situation in the actual market, as the operating rate of weaving manufacturers increases, the inventory of regular gray fabrics in the factory increases accordingly, and the current price of upstream raw materials is in a downward channel. Many manufacturers plan to buy raw materials at the bottom, so there are expectations for replenishing positions again in February. At that time, you can pay attention to the placement and implementation of new orders at home and abroad.
At present, the operating rate of pure polyester yarn companies has increased to 72.41%, a month-on-month increase of 12.04%. At present, most cotton mills have resumed production in an orderly manner, but due to factors such as the insufficient number of migrant workers, the operating rate has not been fully improved. Given that the current inventory of yarn mills is generally low and the processing fee has been restored to around 4,400 yuan/ton, it is expected that the operating rate of polyester yarn companies will increase to 75%-80% next week. Downstream weaving companies have gradually digested their early stockings of raw materials, and there are certain expectations for replenishment. The filament market transaction situation is expected to improve next week. However, after a long period of deserted production and sales, the finished product inventory of filament factories is under great pressure, and the possibility of promotion at the end of the month cannot be ruled out. Therefore, it is difficult for short-term filament prices to rise significantly. The price of POY150D is expected to be 7100-7400 yuan/ton.
To sum up, although port inventories are still in the stage of slight accumulation, ethylene glycol prices rose slightly last week, supported by optimistic expectations such as shrinking supply, reduced imports and a rebound in downstream demand. Facilities such as Satellite Petrochemical, Hengli Petrochemical, and Zhejiang Petrochemical plan to switch to EO production in May. Remote supply pressure will be relieved, and superimposed demand will improve. It is expected that ethylene glycol will enter the destocking channel in March. However, the current high inventory of ethylene glycol ports is still the main factor restricting the sharp rise in prices. In the later period, it is necessary to continue to track the pace and intensity of demand-side recovery.
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