Recently, news of load reduction and maintenance of overseas ethylene glycol units and maintenance of domestic units have attracted widespread attention in the market.
Reporters have noticed that there has been a significant increase in recent maintenance reports on overseas ethylene glycol plants. Specifically, Saudi Arabia’s kayan 850,000 tons and Yansab’s 910,000 tons units were shut down for maintenance until early March, Sharq’s total production capacity was 2.15 million tons and operated at reduced load, Iran’s Morvarid’s 500,000 tons unit was temporarily shut down in early February, Kuwait Dow and Taiwan’s South Asia unit were 3 —The maintenance plan will start in April. At the same time, multiple domestic ethylene glycol units will also undergo maintenance one after another starting in late February.
In this regard, Guan Di, the investment consulting department of SDIC Essence Futures, explained that after the holiday, due to the impact of less than expected demand recovery and weakening coal prices, ethylene glycol prices fell rapidly, while crude oil and ethylene prices were relatively strong relative to chemicals, and oil prices The profit and loss margin of ethylene glycol widened again. Low efficiency and unexpected shutdowns of some devices have resulted in the recent round of maintenance of devices in various countries.
According to industry insiders, the rotational maintenance of domestic and overseas ethylene glycol plants will have a greater impact on the supply side of the ethylene glycol market.
“Large-scale maintenance and load reduction of equipment in major importing countries will have a greater impact on my country’s ethylene glycol imports, and import volume may continue to remain at a low level. Among several large domestic units, Zhejiang Petrochemical and Yulin Chemical have reduced their load. The restart of satellite petrochemicals has been delayed, there is no expectation of restarting coal equipment, and the overall supply is also becoming tight,” said Zhu Lihang, an analyst at Zheshang Futures.
It is worth mentioning that there was a centralized maintenance phenomenon in the ethylene glycol market before the Spring Festival this year. Does this round of maintenance after the holiday have similar expectations and impacts as before the holiday?
“Part of the overseas and domestic inspections of ethylene glycol are routine inspections, and part of them are manufacturers considering economic benefits. Compared with the current wave of inspections before the holiday, there are certain differences between the current inspection load reduction and the previous wave of inspections, and the impact on the market is also different. “Zhou Yun, a researcher at Hengli Futures, said that the reduction in the load of ethylene glycol units before the holiday brings two expectations. One is the conversion of domestic units, and the other is the shift in domestic epidemic prevention policies. The macro has turned to be positive and optimistic; downstream stocks have been proactively stockpiled, and ethylene glycol has been depleted. The inventory is strong and prices are rising. However, the current maintenance load has been reduced, the supply reduction expectations have been fulfilled, the positive macro sentiment has dropped, the recovery of industrial orders has not been as expected, the destocking of ethylene glycol has been weak, and the price has fallen.
It is reported that the current ethylene glycol market is still in a high inventory state. The current ethylene glycol port inventory in East China is 1.012 million tons, which is at a historical high for the same period.
In fact, since entering 2023, the seasonal accumulation of ethylene glycol has been obvious. “In January, due to the rapid decline in the operating rate of polyester before the Spring Festival, ethylene glycol accumulated nearly 400,000 tons in storage. In February, some domestic units reduced production and reduced load. At the same time, as the polyester operating rate rebounded after the Lantern Festival, ethylene glycol The accumulation range is expected to narrow, but it is still expected to accumulate more than 100,000 tons.” Guandi said that after March, if the maintenance and conversion plan of the ethylene glycol plant is successfully implemented, the import volume will remain at a low level of around 500,000 tons. level, then with the seasonal recovery of polyester operating rates and improvement in supply and demand, ethylene glycol is expected to enter a destocking cycle.
Judging from the current time point, most industry insiders expect that ethylene glycol will enter the destocking channel in March.
“Currently, ethylene glycol is still being overstocked in February. If you really want to enter a longer destocking cycle, you have to wait until after March.” In Zhu Lihang’s view, if demand can recover in the future, domestic production will be superimposed Affected by multiple factors such as low prices and declining overseas imports, ethylene glycol is expected to enter a destocking cycle. However, if the price of ethylene glycol rebounds sharply, profit restoration may bring about the recovery of the supply side, and the sustainability of the destocking needs to be further tracked. Zhu Lihang said that judging from the current profits and maintenance plans, destocking in March is a high probability event.
“The rhythm of ethylene glycol destocking in the later period depends on import volume, inventory and downstream polyester load.” Zhou Yun said that if the ethylene glycol destocking channel is opened in March, at least three factors will need to resonate. First, the import volume has shrunk; second, the “gold, three, silver and four” polyester and downstream products have been realized beyond expectations; third, all domestic EG conversion devices have been realized.
Similarly, Guandi also believes that under the expectation of supply shrinkage, the ethylene glycol destocking channel should be opened as scheduled in March, but the extent of destocking is still affected by two factors: “On the one hand, the current coal price continues to weaken; Coal-based profit losses continue to narrow. If ethylene glycol prices rebound strongly, coal-based factory units will be more willing to restart. On the other hand, although polyester and downstream weaving factories are actively resuming work and production, the current demand for downstream textile and apparel The recovery is slow, terminal orders are overall lower than expected, and polyester factory inventories have accumulated rapidly recently,” he said.
In his view, the ethylene glycol market in the later period needs to pay attention to the order situation during the seasonal peak demand season from March to April. “If terminal demand improves, ethylene glycol is expected to see a wave of valuation recovery due to destocking expectations. However, if orders continue to be poor, polyester factories may be forced to maintain low operating levels, putting pressure on polyester raw material prices. .” Guandi said.
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