U.S. crude oil finally fell below the $100 mark overnight, and PTA valuation continued to fall with the decline in oil prices, closing at 6,044 yuan. Ethylene glycol was helped by the recent announcement of maintenance plans for many units, and the market was relatively resistant to decline. The rally fermented in the afternoon and closed up 4.75%. The price was quoted at 4,479 yuan.
As concerns about economic recession once again hit the commodity market, panic once again dominated the selling of risk assets. International oil prices both fell below the US$100 mark. The high levels of refined oil cracking differentials in European and American markets continued to fall significantly. The refined oil market cooled significantly, and in the early morning API Data showed that crude oil inventory accumulation exceeded expectations, putting significant pressure on oil prices in the short term. The domestic crude oil system’s aggressive compensatory decline further aggravated the market’s pessimism.
Costs have dropped significantly, and pressure on PTA disks is inevitable. At the same time, the supply of goods in Ningbo increased yesterday, and the tight spot circulation situation has eased. On the polyester demand side, the current negative feedback model is also gradually transmitted to the PTA side. The main force of PTA continues to operate at a low level. Short fiber also broke through and fell to a new low. In addition to cost pressures, weakening demand, and an obvious increase in supply in July, the market lacked strong support.
EG’s own supply and demand logic is poor and has become an empty product. However, ethylene glycol plants have suffered losses for nearly 7-8 months. As prices continue to decline, the number of production cuts due to efficiency reasons has increased. The supply side has shrunk significantly, and the operating rate has dropped to below 50%. At the same time, many sets of equipment have recently announced maintenance plans, and the supply and demand pattern is expected to ease in stages, making the market relatively resilient. From July to August, the maintenance and restart of ethylene glycol storage equipment are parallel. Judging from the current situation, Longzhong Information predicts that it will be difficult to increase the domestic ethylene glycol start-up load in July.
It’s hard to expect anything in terms of demand. The raw material inventory of polyester factories is relatively abundant. Recently, factories have been less enthusiastic about buying goods and want to increase joint production reduction efforts. However, inventory in East China continued to destock slightly this week. Today’s data shows that the total inventory at EG Port is 1.2048 million tons, a decrease of 21,000 tons or 1.71% from the previous statistical period. The shipment volume at the main port improved slightly this week, while the arrival of goods at the terminal was slightly delayed due to the shipping schedule, and the inventory at the main port was overall destocked.
Cathay Juan Futures believes that in the early stage, the focus of ethylene glycol trading revolved around the marginal cost of coal production, and as the cost side weakened, the valuation of ethylene glycol fell further. During the decline, a large number of futures traders counterattacked, leading to spot selling. The pressure is high and the basis is weak. We need to see a further significant reduction in supply or a sustained improvement in demand to reverse the current negative feedback model.
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