The actual trading atmosphere in the domestic ethylene glycol market has weakened recently, and market participants expect that the market may remain tepid before the Lunar New Year in late January. Currently, some polyester manufacturers have stopped purchasing raw material MEG due to holiday considerations. Due to the decline in downstream polyester operating rates during the holidays and the supply pressure caused by the upcoming release of new production capacity, the market atmosphere is gradually weakening.
In terms of new production capacity, the actual increase will be after the holiday. Zhejiang Petrochemical currently plans to launch its new 750,000 tons/year MEG device in Zhoushan on January 18, and the one that has been commissioned before the holiday Hengli’s 900,000-ton ethylene glycol unit and Inner Mongolia Rongxin’s 400,000-ton coal-to-ethylene glycol unit are both scheduled to be produced and sold after the year. Domestic increases in supply are expected to be significant in February, and in terms of port inventory, there will be accumulated inventory during the Spring Festival. It is expected that although the current port inventory level is low, and there are still uncertainties such as weather at the port, the inventory will not put too much pressure on MEG prices. MEG prices can still find support in the low inventory.
At present, the overall operating rate of the downstream polyester industry has dropped to 76%, and the operating rate of most polyester and downstream textile industries will not recover until the second half of February. Under the influence of low downstream demand and low operating rate , post-holiday demand is relatively bearish in the face of raw material MEG market performance, which may put downward pressure on the spot market. It is also necessary to pay attention to the actual recovery of polyester factories by then.
Peripheral macroeconomic performance before the holiday was relatively warm. Although tensions in the Middle East have eased, market participants are still worried about Iran’s supply and transportation issues in the Middle East due to the tight supply of natural gas in Iran. On the one hand, the Sino-US trade friction has made progress in the first phase, and domestic policies have also maintained loose monetary policies. The economic situation is expected to improve in 2020, which will provide support for the commodity market. It is also necessary to pay attention to the impact of foreign news during the holidays. </p
