Affected by the plunge in international crude oil on Monday, the chemical sector fell sharply.
Data source: Jin Lianchuang
Recently, the spot market for ethylene glycol in East China has been severely hampered by the contradiction between supply and demand, with prices rising and falling several times. At the beginning of last week, under the market’s expectations for OPEC production cuts and domestic stimulus policies, international crude oil rebounded from lows, and the ethylene glycol market price rebounded in the short term. However, bulls lacked confidence in boosting, and the market price soon fell back. On Wednesday, under the influence of the unexpected incident in South Korea’s Rakuten, market sentiment warmed slightly in early trading. However, the impact on domestic fundamentals was limited, and then the market price fell again. Affected by the sharp drop in international crude oil, the chemical sector fell sharply on Monday, with ethylene glycol opening at the limit. The East China spot market opened at 3,780 yuan/ton in early trading, down 400 yuan/ton from last Friday.
Saudi Arabia slashed prices, international crude oil plummeted
OPEC last Friday Negotiations in Vienna with its non-OPEC production-cutting allies led by Russia failed to reach an agreement, with Russia opposing OPEC’s proposal to significantly cut production to stabilize oil prices. Then last Saturday, Saudi Arabia began a promotion to increase production and reduce prices, significantly lowering the sales price of crude oil in April. International crude oil prices collapsed and fell in early trading on Monday.
After Brent crude oil plunged 10% on the previous trading day, it plunged 31% at the opening of this Monday, and then narrowed and still fell more than 20%. Futures suffered the worst ever In one of the fierce sell-offs, prices fell 31% (about $14.25/barrel) in just a few seconds after the opening of the Asian trading session on Monday, hitting the lowest level of $31.02/barrel since the United States launched the war in Iraq in January 1991. the largest decline.
Ethylene glycol stocks continue to accumulate, and supply pressure is highlighted
Spring Festival Since then, ethylene glycol inventory in East China has continued to rise, from 353,000 tons a year ago to 761,000 tons today. As shipments continue to be low, port inventories are still expected to accumulate. Although the integrated unit has recently reduced its ethylene glycol output load, the unit has been undergoing intensive maintenance. However, in terms of new devices, Hengli Petrochemical and Zhejiang Petrochemical started mass production in February, and the output in February reached about 110,000 tons. Therefore, domestic supply has been on a growth trend recently.
Data source: Jin Lianchuang
Downstream polyester factories are resuming work faster, but inventory pressure remains
With the gradual improvement of the domestic COVID-19 epidemic, the operating rate of downstream polyester factories has rebounded rapidly, and after the Spring Festival, polyester The production and sales of polyester polyester market increased for the first time, and the overall improvement in downstream demand has accelerated the resumption of work of polyester factories. It is expected that in the short term, the comprehensive operating rate of polyester will maintain a rapid recovery momentum. However, due to the low worker arrival rate and the inventory pressure of polyester and weaving, enterprises in the early stages of resumption of work are in a situation of low operating hours, low production and sales, and high inventory.
To sum up, the ethylene glycol market will face huge downward pressure. Most of the equipment planned to be put into production in the first half of 2020, and the equipment already in production are operating stably, there is no doubt that the supply of ethylene glycol is on a steady upward trend. Affected by the new coronavirus incident, the demand for polyester is far less than expected. While the supply and demand side of ethylene glycol itself is facing huge pressure, crude oil has fallen sharply, cost support has collapsed, and the pessimism in the ethylene glycol market is severe. </p
