Recently, the domestic ethylene glycol market price has fallen sharply. The average price in the East China market is 4,777 yuan/ton, 6.83% lower than last week’s average price, and the average price in the South China market is 5,170 yuan/ton. The Federal Reserve has raised interest rates sharply, and investors are worried about the prospect of crude oil demand. International oil prices continue to fall, and international naphtha prices have followed suit. Thermal coal prices have fallen back from highs, and the positive cost support has faded.
From the supply side, two sets of oil-to-ethylene glycol units have been shut down, and domestic production and supply have shrunk. However, at the port, as cargo arrives for unloading, and at the same time, the port has less shipments, the inventory has accumulated significantly. As of now, East China has The main port inventory is around 1.24 million tons, which is negative on the supply side.
From the demand side, the current terminal order situation has not improved, and the overall operating load of the polyester industry has remained relatively stable. At the same time, the mentality of industry players is pessimistic due to the continued low operation, the market is insufficient to buy, and the demand side continues to be weak. Overall, the contradiction between supply and demand has intensified due to high and accumulated port inventories. At the same time, the sharp drop in costs has suppressed the market center of gravity. Under the double pressure, the domestic ethylene glycol market price has fallen sharply recently.
High inventory, low valuation market trading
With the arrival of summer, the terminal off-season order situation is not good. Polyester companies are facing high inventory of finished products and it is difficult to increase the load, which continues to remain between 82-83%. Affected by this, shipments from the main port slowed down and inventory continued to accumulate. As of the week of June 23, the inventory at the main port in East China reached 1.247 million tons, a new high in 20 months.
Spot prices fell under pressure and production losses expanded
Due to the suppression of high inventory, domestic ethylene glycol spot prices have fallen rapidly recently. However, the performance of the raw material end is acceptable. The ethylene glycol raw material end has been weak and volatile, and the decline has been limited. Recently, the losses of ethylene glycol in various processes have further expanded, and the losses of the naphtha integrated unit have once again expanded to more than 200 US dollars/ton.
Are international oil prices firm? Is ethylene glycol still supported under low valuation?
The current performance of crude oil is unclear. Some industry players predict that both coal and oil prices will weaken. If oil prices fall in the future, the overall sentiment of the commodity will be lower.
Generally speaking, coal prices may mainly consolidate next week, and international crude oil prices may fall back and consolidate. The cost-side benefits will no longer exist. Domestic production is expected to increase slightly, and it will be difficult to destock at ports. The demand side will remain weak, and the supply and demand pattern is weak. It will continue, and the negative effects on the market are obvious. However, the current market is already at a low level. Due to cost factors, the probability of continued decline is small. It is expected that the domestic ethylene glycol market price will be weak and adjust downward next week. However, the decline will take some time to digest. It is expected that the ethylene glycol market in East China will continue to consolidate at a low level next week, with prices running between 4,300-4,500 yuan/ton.
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