Introduction: International crude oil fluctuates around US$70, the cost of chemical products continues to be high, coupled with the slow increase in the overall supply of domestic ethylene glycol companies, the reduction of imported goods, and the low level of port inventory, domestic ethylene glycol continues to rise, but The market surged to a price near 5,400 yuan/ton. It was obviously pressured by the reduction in demand for downstream polyester, which made it difficult for the market to rise further. There was no substantial negative news inside and outside the market in the short term, and the main shock was in the box.
Figure 1 Domestic ethylene glycol market price and crude oil price trend chart
Source: Longzhong Information
High crude oil and coal prices have significantly supported the cost of ethylene glycol
OPEC+ continued its pace of small monthly increases in production. In addition, although the recovery of drilling platforms in the U.S. Gulf region was slow after Hurricane Ida, the United States released strategic reserves to supplement output. The market did not notice this. Worry; Negotiations on the Iranian nuclear issue have reached a deadlock, and potential supply increases are difficult to release in the short term. Therefore, short-term crude oil prices have not fluctuated significantly. Ethylene glycol is affected by the high price of its raw materials. The production cost of integrated enterprises is around US$690/ton, and the company’s gross profit is hovering on the edge of profit and loss.
Domestic coal is in short supply. Various policies have been issued frequently since July, but spot circulation is still unsatisfactory. In terms of imports, due to the recent frequent heavy rainfall in Indonesia, mine production and shipments have been affected. , insufficient supply coupled with rising sea freight, imported coal is difficult to increase in volume due to high costs, and the situation of weak supply and strong demand is still severe. The production cost of coal-based enterprises is around 6,500 yuan/ton, and the enterprises’ gross profit losses are relatively serious.
Domestic supply has increased slowly and import volume has dropped significantly compared with previous years
Domestic New equipment was put into operation one after another, and the production capacity base was expanded to 19.711 million tons. Integrated equipment is diversified, and the start-up is relatively stable; the coal-making equipment is relatively single, and due to the impact of high coal prices, the start-up continues to run at a low level, and many companies have been idle for a long time; the production capacity has increased compared with previous years, but the output growth has decreased. In terms of imports, due to the impact of public health events, extended shipping schedules, increased freight and other factors, import volume has decreased significantly since the fourth quarter of last year (for details, please refer to Longzhong import and export data), and there is no increase expected so far.
The results of downstream polyester production restriction quotations are generally effective, but there are still expectations of decline
Terminal orders are not expected to improve, and the inventory of finished products in downstream polyester factories continues to accumulate. Unfortunately, price reductions and promotions become more frequent, while production and sales data show that companies are good and bad. In addition, Jiangsu’s energy consumption “dual control” inspection will also be carried out to a certain extent. The extent of the impact on end demand has been affected, and some companies still expect to continue to reduce production.
To sum up: the raw material end continues to be high, supporting the cost of ethylene glycol; although the main port in East China this week Inventories have increased, but are still at a low level. Coupled with the tight arrival of goods next week, the trend of inventory accumulation is still difficult to occur, and the phenomenon of large-scale inventory accumulation at ports is far away; the domestic operating rate is affected by the low coal-based operating rate, and the overall level is temporarily It is difficult to achieve a significant improvement, and the tight supply situation may continue; the current demand side is sluggish, but the rigid demand support from the increase in the production capacity base is still there. There is no real negative news inside and outside the short-term market, and there is no room for the ethylene glycol market price to fall. The traditional peak season of the terminal in the fourth quarter may push the ethylene glycol price to a new high. </p
