Ethylene glycol is moving forward with a heavy load in 2020. The normalization of high inventory at ports and the large-scale commissioning of new production capacity during the year have kept the market price of ethylene glycol hovering at a low level during the year. So can ethylene glycol regain its strength in 2021?
As of the third quarter of 2020, domestic ethylene glycol production capacity is 14.016 million tons, of which coal The production capacity is 5.29 million tons, accounting for 37.74% of the total production capacity, the petroleum production capacity is 7.806 million tons, accounting for 55.69% of the total production capacity, and the methanol production capacity is 920,000 tons, accounting for 6.57% of the total production capacity. In the first three quarters of this year, 2.25 million tons of new production capacity were added, and the new production capacity is expected to be 4.65 million tons throughout the year. The annual production capacity will reach 16.616 million tons, with a production capacity growth rate of 39.52%. Most of the new production capacity this year is large-scale refining and co-production units. Among them, Hengli Petrochemical’s two petroleum production routes (90+900,000 tons) are fully operational this year, which will have a greater impact on the market supply side.
By 2021, the production capacity of newly installed ethylene glycol equipment is expected to be 6.47 million tons. By then, the total domestic ethylene glycol production capacity will reach 22.986 million tons, and the production capacity growth rate is expected to reach 38.94%. The total domestic supply is expected to reach 21.568 million tons, of which Satellite Petrochemical’s new production capacity in 21 will be 1.82 million tons, which will have a great impact on the market. However, the growth rate of downstream polyester production capacity has slowed down. It is expected that by 20201, domestic polyester production capacity will reach 68.335 million tons, and the demand for ethylene glycol will be 18.8979 million tons. It can be seen that the oversupply of ethylene glycol will still intensify in 2021.
From the perspective of capacity clearance, the operating rate of coal-to-ethylene glycol is 51.54% at the current market price. Some coal-to-ethylene plants with more advanced processes are still operating at the current price. There is profit margin. Moreover, most of the newly added coal-to-coal plants are based on co-production and have improved risk resistance. Therefore, it is difficult to clear large-scale production capacity in a short period of time. There is still a long way to go for the ethylene glycol market to shift to a balance between supply and demand.
Generally speaking, there are still macro uncertainties about crude oil and Sino-US trade relations, which worries the market. And since it is difficult to phase out backward production capacity in a short period of time, the oversupply situation will continue in 2021. In the future, we still need to pay attention to the progress of new production capacity and whether the “new pneumonia” epidemic will become a normal condition and continue into 2021.
Data source: Jin Lianchuang</p