Introduction: With the arrival of the traditional “Golden Nine” peak season, why has the ethylene glycol market plummeted, and why has all the gains since August been given back? Let us analyze why the market experienced a two-level reversal in September.
Public health incidents have recurred, macro risk aversion has increased, and negative haze has enveloped the chemical fiber industry chain
The weather has turned cooler, and we have entered an environment where the new coronavirus is active again . The number of daily new cases in countries such as Britain and France continues to soar, and France’s daily new cases exceed 10,000. The second outbreak of the epidemic has increased market concerns about crude oil demand, and crude oil prices have once again fallen below US$40 per barrel. Ethylene glycol cost support is insufficient, and market prices have retreated from high levels. The foreign trade of the terminal weaving industry, which was recovering, has been blocked again. Weaving recovery is less than expected, making the market more pessimistic about the demand side of ethylene glycol.
The feedback on import shrinkage has ended, and the supply and demand logic has changed again
After entering mid-September, with the restart of three 360,000-ton units in Taiwan Nanya, Installations affected by hurricanes in the United States are gradually recovering. The logic that shrinking domestic ethylene glycol imports dominate the market has come to an end. From a domestic perspective, the freezing point for upstream factory operations has passed, and the current domestic ethylene glycol operating load has increased to 62.45%, which is the same as the same period last year. Moreover, the new equipment is about to be put into operation. Sinochem Quanzhou’s 500,000 tons and Zhongke Zhanjiang’s 400,000 tons have been successfully tested, and Zhongke Zhanjiang can officially place orders. Moreover, under the current situation of relatively good profits on the petroleum production route, oil processing plants are more willing to maintain their operating load. The increase in the supply side of ethylene glycol will gradually appear. The supply and demand relationship of ethylene glycol is accelerating from a tight balance to oversupply.
At present, the National Day holiday may become a watershed for ethylene glycol long and short. There is still replenishment demand downstream before the National Day, which supports ethylene glycol. Moreover, due to the Sino-European arbitrage window, the increase in domestic ethylene glycol exports has slowed down the accumulation of stocks. However, after the holidays, with the release of new domestic production capacity and the gradual restart of US equipment.
The supply-side increase is expected to be gradually realized, putting pressure on market prices. It is expected that the market price of ethylene glycol will be difficult to exceed the 4,000 yuan mark this year. </p
