Yesterday, the “2021 China Chemical Industry (Derivatives) Conference” (hereinafter referred to as Chemical Industry) co-sponsored by Dalian Commodity Exchange (hereinafter referred to as Dalian Commodity Exchange) and China Petroleum and Chemical Industry Federation (hereinafter referred to as Petrochemical Federation) Conference) was held in Hangzhou on April 7. The forum adopted the form of “main forum + sub-forum” and was broadcast live online.
The DCE Chemical Industry Conference was formerly known as the China Plastics Industry Conference. It was co-founded by DCE, Petrochemical Federation and China Light Industry Federation in 2008 and has been held for 13 consecutive sessions. , has gradually become a brand event for cooperation and exchange between industry and finance in my country’s chemical industry. Last year, the name of the conference was changed from “China Plastics Industry Conference” to “China Chemical Industry (Futures) Conference”, and this year it was further upgraded to “China Chemical Industry (Derivatives) Conference” on this basis. The difference between the two words reflects the extension of the theme of the conference and the expansion of derivative instruments.
As an annual event in the industry, the Chemical Industry Conference has attracted widespread attention from market participants. Since last year, factors such as the global COVID-19 epidemic, international trade frictions, and severe cold weather in North America have had a serious impact on the energy and chemical sector. Especially since February this year, due to the extreme cold wave weather in North America, some refineries and oil pipelines in the United States were temporarily shut down. Brent crude oil futures rose to a high in the past year, with liquefied petroleum gas, styrene, polypropylene, etc. The price fluctuations of downstream commodities represented by petroleum products have intensified, and the industry is facing the challenges of price fluctuations, supply and demand, logistics and other uncertainties. What are the industry hot spots at this year’s conference? What do the big guys think about the chemical market situation and changes in product trends?
China’s ethylene glycol imports will gradually decrease
From ethylene oxide (EO) In terms of global and Chinese consumption structures, ethylene glycol is the largest downstream. As the largest downstream of EO, ethylene glycol will affect the price trend of EO. At the same time, the price of ethylene is also an important indicator that affects the price of EO.
Zhao Jun, general manager of Sinochem International’s Chemical Raw Materials Division, said at the forum that the rapid development of China’s economy has spurred the growth of ethylene glycol consumption, and China is becoming the global leader in ethylene glycol. consumption center. Global EO production capacity is growing slowly, with new production capacity mainly coming from China, while downstream demand is mainly used for the production of ethylene glycol.
China’s ethylene glycol demand accounts for nearly 60% of the global share and is the source of stable growth of global ethylene glycol.
From the perspective of production technology, coal-head and gas-head ethylene glycol are highly competitive. Coal-based ethylene glycol needs to have high quality and high operating rate to have competitive advantages. The global supply of ethylene glycol is dominated by the ethylene route. The growth of coal-based ethylene glycol is relatively rapid. The stable growth of polyester on the demand side is the main driving force.
“From the perspective of the import structure, it mainly comes from the low-cost Middle East, including Saudi Arabia, Kuwait, Iran and other regions. Products from Japan and South Korea, we believe, will gradually Being squeezed out of the Chinese import market. Because of their low-cost advantages, American products will gradually replace the import position in the Japanese and Korean markets through ethane cracking into ethylene and ethylene glycol.” Zhao Jun said.
At the meeting, Zhao Jun predicted that global trade volume will be basically flat from 2020 to 2023. Under normal circumstances, production capacity and output are growing, and trade volume is also growing, but trade volume is flat. What is the reason? Explain the reliance on one region to meet local needs. What is the main area of this area? Mainly China, whose demand growth is met by increased supply. “Perhaps in the future, if we make a more optimistic estimate, the trade volume will become smaller, because in China’s ethylene glycol imports, Jiangsu and Zhejiang account for more than 90% of the total imports. If these two places are self-sufficient, , in the future, the entire import volume will decline sharply, and the trade curve will trend downward.” Zhao Jun said.
In his view, global ethylene glycol production capacity will be accelerated after 2020, global trade volume will be relatively stable, and new production capacity will mainly meet the region’s own new demand. Imports of ethylene glycol from Northeast Asia (mainly China) are still increasing, and the Middle East and North America still play an important export role.
“The new ethylene glycol production capacity in North America is relatively limited, and its impact on the Chinese import market will be limited in the short term. The export volume of North American ethylene glycol will increase significantly after 2020. Net export volume may exceed 2.5 million tons by 2021.” Zhao Jun said that the new ethylene glycol production capacity in the Middle East is limited and has a limited impact on China’s import market.
In his view, coal price is the key factor that determines the income of the coal-to-ethylene glycol project. Ethylene glycol is a product of low coal prices, but its production capacity has increased in recent years. Faster. Ethylene prices fluctuate in tandem with oil prices, and the price of ethylene glycol falls sharply under low oil prices.
From the perspective of cost economy, low oil prices are beneficial to the integrated ethylene glycol project of the oil and gas heads. There is strong competition in the production of ethylene glycol through the cracking route of light hydrocarbons, while the production of ethylene glycol from coal must be based on high quality and high operating rate under high oil prices, so that the cost advantage can be revealed.
“With the rapid growth of China’s coal-based ethylene glycol production capacity, market competition will become fierce. A large amount of ethylene glycol is put into production and ethylene frequently fluctuates, and the import volume of ethylene glycol will gradually decrease, and the industry will also usher in a new round of reshuffle.” Zhao Jun said.
The story of polyolefins still having to focus on the supply side
Looking back on 2020, the plastics market once again staged a V Shape reversal, ��Quarterly prices rose to a new high for the year. How will the plastic polyolefin market develop this year?
Xu Yan, deputy manager of the Information Department of PetroChina East China Chemical Sales Company, said that from the fundamentals of industrial supply and demand, domestic polyolefin growth will enter a period of explosive growth in 2020, and import growth will The proportion has declined, but the increase in domestic production is relatively large. However, compared with 2017, 2018, and 2019, the increase in imported polypropylene is very obvious, indicating that the release of domestic production capacity is also accelerating.
Xu Yan predicts that the output of polyolefins in 2021 will be 85.9 million tons, a year-on-year increase of 20.9% and 15.2% higher than in 2020. Polyethylene increased by 19.1% year-on-year. Polypropylene (excluding powders) increased by 23.2%, which was higher than the 18.6% in 2020. Overall, 2021 is still a year of significant increase in production capacity, and the increase in supply is relatively obvious.
In Xu Yan’s view, the new integrated device will be the fastest growing enterprise in the next five years. Preliminary statistics show that by 2025, the total PE production capacity of the new integrated enterprise will be 13.55 million tons. . The single set has large scale and advanced technology. The management and front-line operation staff have been trained by central enterprises for many years. They have high management level, skilled operation and high overall quality. It will have a greater impact on traditional state-owned petrochemical companies.
According to Xu Yan, East China will still be the region with the largest domestic PP demand in the next five years. The proportion of East China and South China has shown a slight downward trend. Southwest, North China, Northeast, The proportion of the northwest region has increased, and the proportion of the southwest region will increase by 18% year-on-year in 2021.
“East China is still the region with the largest gap between supply and demand, and northwest China is the largest transfer area. With the rapid increase in domestic production capacity, domestic polypropylene supply will already be in excess in 2021. There will be a serious surplus of domestic polypropylene in 2025.” Xu Yan said that adjusting the operating rate alone can no longer alleviate the domestic supply and demand contradiction. Exports can alleviate some of the domestic supply pressure, but there are also many foreign production expansions. PP entered the era of phasing out backward production capacity earlier than PE. This elimination is global.
In his opinion, most of the new integrated and PDH installations are concentrated in coastal areas, especially PDH installations are all in coastal areas, and East China and South China are the largest in the country. PP use areas, so new integration and PDH companies to seize the East China market is the top priority. The share of inland PP manufacturers in the coastal market will be gradually eroded.
He said that from a cost perspective, judging from the current situation, the probability of crude oil demand returning to pre-epidemic levels within the year is very low, and OPEC+ still has 8 million barrels per day. The above idle production capacity can completely restrain the sharp rise in oil prices. Excessively high oil prices are not what all oil-producing countries want to see. “$65/barrel is a price acceptable to most oil-producing and oil-consuming countries. If there are no new emergencies, it is highly likely that Brent crude oil prices will fluctuate between $60 and $70/barrel in 2021.” Xu Yan said.
As for the future development of polyolefin market trends, Xu Yan believes that the plastics market in 2021 will continue to be warm on a macro scale. However, from the perspective of domestic plastic supply, large-scale domestic capacity expansion will inevitably lead to increasing domestic supply pressure, and the pressure in the second half of the year will be significantly greater than that in the first half. Due to the impact of widespread shutdowns of US petrochemical plants due to severe cold weather in February, as well as the weakening of foreign industrial production due to the epidemic, foreign demand for plastic raw materials is strong, and the price of polyolefins will remain low internally and high externally until June and beyond.
Xu Yan believes that 2021 will be a year in which large-scale upstream capacity expansion and global central banks continue to “release water” in parallel. The main contradiction in the market is still the game between capital and supply increase. Overall, the polyolefin market in 2021 is affected by funding and concentrated capacity expansion, and prices are likely to fluctuate in a wide range. Prices in the first half of the year are higher than in the second half of the year, and prices of products that are heavily affected by imports will maintain a strong trend. In his view, the market’s main focus should still be on supply, because there are still stories to tell about supply this year. </p
