Fabric Products,Fabric Information,Fabric Factories,Fabric Suppliers Fabric News The tight supply and demand pattern drove ethylene glycol to rise sharply, and it was strong in the near future but weak in the later period!

The tight supply and demand pattern drove ethylene glycol to rise sharply, and it was strong in the near future but weak in the later period!



Part 1 Market Quick Overview This week is the first full trading week after the Spring Festival. The commodity futures market continues the hot trend before the holiday and maintains a strong upward momentum ov…

Part 1 Market Quick Overview

This week is the first full trading week after the Spring Festival. The commodity futures market continues the hot trend before the holiday and maintains a strong upward momentum overall. Monday arrives Most varieties of commodities experienced large gains on Thursday, but the overall market experienced a significant correction on Friday. In terms of index performance, the commodity index (Wenhua Commodity) rose sharply by 2.83%, of which industrial products rose by 3.66%, nonferrous metals rose by 1.99%, chemicals rose by 0.98%, and black rose by 0.67%. Agricultural products and precious metals fell slightly during the week, with decreases of 0.76% and 0.32%. Looking back at financial futures, the market fell sharply this week. Stock index futures followed the stock market and fell sharply. The stock index IF fell by 7.5%. Treasury bond futures continued a weak downward trend. Although there was a rebound during the week, they were still under short pressure from the bond market in the end, falling by 0.25%. .

Benefiting from the overall upward trend of commodities, the futures market saw a net inflow of 11.57 billion yuan this week, including 10.09 billion yuan in commodity inflows and 1.48 billion yuan in financial inflows. From the perspective of capital flows in various sectors, black ranked first with a net inflow of 4.11 billion yuan, followed by stock index IF and chemical industry with a capital inflow of more than 2 billion yuan. Non-ferrous metals, oils, oils, coal and crude oil also all had a net inflow of more than 1 billion yuan. inflow. In the net outflow sector, treasury bonds had a net outflow of 1.06 billion yuan. In addition, the grain and agricultural and sideline sectors also showed net outflows this week.

Weekly changes in fund settlement of futures varieties last week

Before the rise and fall of commodities last week Ten varieties

Statistical interval: February 22-26, 2021

Data source: Text Hua Finance

Part 2 Hot Observations

In this issue, let’s talk about ethylene glycol, which led the gains during the week. Ethylene glycol has been on a gradual upward trend since the beginning of November last year. Especially since February, ethylene glycol has been bullish due to the combination of favorable fundamentals, macro boost and rising crude oil. Driven by the strong performance of commodities, ethylene glycol has been bullish. Especially after the Spring Festival, the performance became even stronger, setting a record of two daily limits in the three trading days after the holiday. It also rose 18.1% this week, closing at a high of 6209 on Friday night, an increase of 36% compared with before the Spring Festival. Why is ethylene glycol so strong after the Spring Festival? Let’s talk about the driving force behind the market.

Recent trend of main ethylene glycol futures contracts

First of all, we believe that the recent price of ethylene glycol has sharply The rise is driven by a tight supply and demand pattern. ◎Downstream demand performed extremely well. The Spring Festival load of the downstream polyester end generally drops to 60-80%, with an average of around 70%. However, this year the work will not stop during the holiday, and the overall load is between 80-85%, which is the highest Spring Festival load in the past ten years. The resumption of downstream polyester production after the holiday is earlier than in previous years. The current polyester load has reached 87.69%. The expectations for future orders are relatively optimistic, and raw material procurement and stocking are active. From the end of February to the beginning of March, the equipment load of downstream weaving factories slowly increased and they gradually resumed normal production. The prices of major polyester products also rose to varying degrees due to the increase in raw materials. Moreover, there is not much pressure on downstream polyester inventories. According to CCF statistics, the polyester load is expected to increase to around 92.5% in March. Under the guidance of this year’s local New Year’s Eve policy, the speed of resumption of weaving work is also significantly higher than in previous years. It is expected that the weaving start-up can reach 60% to 70% of the normal level in early March, and can reach around 80% in mid-to-early March. Therefore, polyester’s own inventory is at a low level, and driven by costs, the prices and profits of various products continue to rise, and polyester and terminal operating rates will maintain a positive recovery. The acceleration of demand-side load increases has also boosted ethylene glycol prices.

◎Ethylene glycol stocks did not rise but fell after the holiday, and stocks in the main ports in East China remained at a low level. Judging from the port data of ethylene glycol in the main port area of ​​East China released by CCF, after the high point of 1.514 million tons on July 20 last year, due to the impact of overseas device maintenance, the volume of ethylene glycol arriving at the port has gradually shrunk. However, due to factors such as weather and cross-regional arbitrage around January 2021, port recovery expectations failed to materialize, and inventory has been in a depletion channel since then. Due to the stagnation of customs declaration and restrictions on logistics and transportation during the holidays, inventory accumulation is often large after the Spring Festival. However, unexpectedly, the actual arrival volume during the holidays this year was less than expected, and the terminals were outbound due to high factory operation and self-equipped transportation fleets. The cargo is flowing smoothly, and the inventory at the main port is falling instead of rising. As of February 25, the inventory of EG ports in the main port area of ​​East China was approximately 626,000 tons, a significant decrease, and the inventory level has returned to a relatively low level. After the Spring Festival, terminals will usher in a large-scale resumption of work and production, and ethylene glycol is expected to continue to be destocked in the later period. Especially in March, with the rebound of polyester load, there is still a large space for ethylene glycol to be destocked, which is expected to be around 150,000 tons. In addition, judging from the progress of production capacity rollout, EG will continue the destocking pattern from April to May.

MEG port inventory index trend

Secondly, the impact of overseas production capacity has become Ethylene glycol is an important driver of growth.
The dependence on imports of ethylene glycol is currently around 55%. However, since the fourth quarter of last year, there has been a decline due to overseas installation.�There are many failures, imports continue to decline, and domestic EG destocking efforts are also relatively large. Recently, due to severe cold weather, a large area of ​​North American ethylene glycol plants has been shut down, including Lotte’s 700,000-ton unit, Formosa Plastics’ two 360,000-ton and 830,000-ton units, MEGlobal’s 750,000-ton unit, Sasol’s 280,000-ton unit, Indorama’s 340,000-ton unit, and LyondellBasell’s 365,000 tons are in shutdown status, involving a production capacity of 3.625 million tons. Although the production loss caused by the batch shutdown of the unit is large, judging from the domestic ethylene glycol import data in the fourth quarter of 2020, the average monthly export volume of ethylene glycol to China in the fourth quarter of the United States was only 23,400 tons, accounting for less than 5% , the actual impact is limited. However, the North American installation involved an interruption in the supply of raw material ethane, which significantly boosted market sentiment. In addition, the price of ethylene glycol in Asia was at a relatively low level at that time, and the arbitrage window for Asian transshipments to Europe and the United States was still open. In addition, several EG units such as Lotte, Dow, and Formosa Plastics have not been able to restart for the time being. Among them, Formosa Plastics’ U.S. restart plan has been postponed for another week. Its ethylene unit plans to restart in early March, and the ethylene glycol restart is expected to be around mid-March. Another 360,000 tons/year device plans to shut down until the end of July; Lotte and MEGlobal initially plan to shut down for a week; the restart time of the sasol and indorama devices is to be determined. Affected by the weather, the arrival of some supplier contracts has been postponed to late March. Superimposed on the frequent maintenance of overseas ethylene glycol units in the first quarter, ethylene glycol imports are expected to shrink significantly from March to April.

Although as the current cold wave weather in the United States gradually subsides and local power is restored, the supply that was forced to shrink before is expected to recover. However, considering the frequent equipment maintenance in Saudi Arabia, the import volume in March It may remain low, and port inventory depletion continues to be strong. According to the recent overseas MEG equipment maintenance situation, there were many overseas equipment maintenance cases in February, including Saudi YANPET1#2#910,000 tons and other equipment, and more restarts occurred than at the end of February. Taking into account factors such as shipping schedules, imports in March were affected The volume is large and still maintains a low position. In addition, according to the monthly maintenance situation in the first quarter of 2021, maintenance losses in February were as high as 386,100 tons. Therefore, my country’s import volume may continue to be low in March, which is a good support for the current port destocking.

Focus on the production progress of new devices in March

As of February 25, according to the latest According to data released by CCF, the overall operating load of domestic ethylene glycol is 75.40%, of which the operating load of coal-to-ethylene glycol is 65.44% (the total MEG production capacity base is 15.835 million tons, of which the coal-to-ethylene glycol production capacity is 5.99 million tons). At present, the mainstream production lines of ethylene glycol are highly profitable. Driven by high profits, there is still a lot of room for recovery in the overall start-up in the later period. Domestic supply will gradually return, such as the restart of some old equipment with poor efficiency at low prices, and some originally planned maintenance After the device is pushed, the return switch of EO-EG is increased, etc.

MEG load trend

MEG Marginal Profit Trend

Therefore, overall, the recent strong rise in ethylene glycol is due to downstream Driven by strong support from the demand side, depleted and low port inventories, and shrinking overseas production capacity affecting imports, the supply and demand situation is tight. Looking at the market outlook, ethylene glycol will be in a strong near-far weak pattern. The overall trend of ethylene glycol in the short term is still expected to be strong. On the supply side, it will take some time to recover overseas equipment or restart the coal chemical industry. On the demand side, the price and production and sales of related products have been followed smoothly. Recently, the sales volume of polyester yarn in Jiangsu and Zhejiang has increased, and some Factory controlled sales. The performance of the downstream polyester end was still strong in March. The benefits of new polyester releases, increased construction starts, and low inventory are still obvious. The market expects that ethylene glycol is still expected to be destocked before April. However, as the absolute price of ethylene glycol rises and profit margins expand, the increase in domestic supply will gradually appear. The widening price difference between ethylene glycol in recent months and far after the holidays also reflects the market’s expectations for an improvement in the supply and demand side of ethylene glycol. However, it will still take time to confirm the inflection point of EG prices under the strong support of the demand side. In the later period, we will focus on the recovery progress of the North American market, the increase in domestic supply, and the follow-up of downstream.

In terms of operations, the current trading logic mainly revolves around the destocking cycle and the expected start-up of new devices. Ethylene glycol will fluctuate in a wide range in the game of expected increase in production and imports remaining low. The probability of an upward trend is mainly high. Under the short-term pattern of low inventory and strong fundamentals, it is expected to be strong in recent months. It is recommended to go long on dips. In March, attention should be paid to the production progress of Satellite Petrochemical’s new 1.6 million-ton unit. If it can be put into operation as scheduled, it will bring an increase in output of 133,000 tons in April, which will have a greater impact on recent-month contracts. </p

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Author: clsrich

 
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