Introduction: The spot market of ethylene glycol in East China has been fluctuating at a low level recently. This week, international crude oil prices bottomed out and rebounded, and the cost side of ethylene glycol was firmly supported. However, the downstream polyester industry and the terminal weaving industry are slow to resume work, and there is a large accumulation of inventory in the downstream. The accumulation of inventory on the supply side and the lack of significant improvement on the demand side in the short term limit the room for rebound of ethylene glycol. On Thursday, the ethylene glycol spot market rebounded, led by crude oil. At the close of trading on Thursday, the spot negotiation range for ethylene glycol was 4385-4395 yuan/ton.
1
Factory start-up has been slightly reduced, and the overall level is above average
The recent petroleum-to-ethylene glycol unit, Mainly due to the smooth operation of domestic integrated units, some petrochemical plants switched to ethylene glycol production due to poor demand for ethylene oxide, and their production ratio increased significantly. The new device facilitates the normal operation of Hengli Line 1, which is about 80% operational. Its Line 2 was successfully commissioned on February 13 and is currently operating at more than 60%; the Zhejiang Petrochemical unit is running smoothly and is 40% to 50% operational. In terms of coal-to-ethylene glycol plants, a 400,000-ton/year syngas production unit in Inner Mongolia Rongxin was restarted last weekend. The current load is still low. This unit was shut down on February 4. As for the methanol-to-ethylene glycol plant, Ningbo Fude stopped for maintenance on February 18, and the maintenance is expected to last about 15 days.
According to Jin Lianchuang data statistics, as of February 21, the operating load of petroleum-to-ethylene glycol was around 70.05%, the operating rate of methanol-to-ethylene glycol was around 39.9%, and the operating rate of coal-to-ethylene glycol was around 39.9%. The glycol operating rate is around 72.82%, and the ethylene glycol comprehensive operating rate is 68.95%. The current operating rate is at an upper-medium level.
2
Port Shipments have picked up slightly, and inventory accumulation is expected in the future
Jin Lianchuang’s latest data shows: East China’s ethylene glycol inventory totaled 538,000 tons on February 20, a decrease of 32,000 tons from February 13. Among them, Zhangjiagang has 307,000 tons (the average daily shipment of a warehouse is 3,149.66 tons); Taicang, 93,000 tons; Ningbo, 100,000 tons; Jiangyin, 31,000 tons, and Yangshan, 7,000 tons. In recent days, as transportation control has gradually improved, shipment levels have rebounded slightly from last week. However, according to the current situation, the three new installations of Inner Mongolia Rongxin, Hengli and Zhejiang Petrochemical, with a total capacity of nearly 3 million tons, were finally settled in late February. This will undoubtedly put pressure on the supply of ethylene glycol in the first half of 2020. The further increase; coupled with the impact of transportation, ethylene glycol shipments are at a low level; therefore, the possibility of accumulation of port inventory in March is extremely high.
3
Downstream The company’s resumption of work is slow, and various products have accumulated inventories
This week (2020.2.14-2020.2.20), the comprehensive operating rate of polyester filament is 63.32% (the effective polyester production capacity is 33.15 million tons). The comprehensive operating rate of short fiber is 54.80% (the effective production capacity of polyester short fiber is 7.86 million tons), the comprehensive operating rate of bottle-grade PET is 61.43%, the comprehensive operating rate of fiber-grade PET is 67.66%, and the comprehensive operating rate of polyester is 63.49% (as of now) , the effective polyester production capacity is 60.35 million tons).
This week, some polyester factories have resumed work, but the overall situation is still at a standstill. However, as the epidemic situation improves, companies in some areas have begun to resume work in stages. In the short term, the operating rate of polyester factories may increase slightly. As of Thursday, the inventory of fiber-grade PET factories in Jiangsu and Zhejiang was around 10 days. The overall inventory of polyester filament factories is 19-27 days, of which POY inventory is 14-18 days, FDY inventory is 16-23 days, and DTY inventory is 24-31 days. In the future, as the epidemic situation improves and downstream operations begin one after another, factory inventories will steadily decline.
Jin Lianchuang predicts that the ethylene glycol market will mainly fluctuate at low levels in the near future. The impact of public health events has gradually weakened, and logistics and transportation between industrial chains have gradually recovered; at the same time, the bottoming out of international crude oil prices has brought certain confidence support to the ethylene glycol market. However, the downstream polyester factories and terminal weaving industry are slow to resume work, and the current weaving operating rate is less than 10%. Weak demand for raw materials is dragging down market prices. It is expected that the short-term ethylene glycol market will remain low and volatile, with a slow recovery. It is expected that the spot negotiation of ethylene glycol next week will be likely to be in the range of 4350-4600 yuan/ton. It is necessary to focus on the impact of downstream resumption of work on ethylene glycol.
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