Introduction: The domestic ethylene glycol market negotiated prices. On that day in December, the highest price of this year was around 6,000 yuan/ton. Ethylene glycol manufacturers I am happy, I have been losing money for a year and finally made a profit at the end of the year; while the downstream polyester companies are “crying”, they have made money for a year, and they start to lose money as the year is approaching. Some people are happy and some are worried. Let me say a few words about whether the market outlook will continue.
First understand the reasons for the strong performance in December
Figure 1 Domestic East China ethylene glycol market price changes
Fundamentally speaking, with terminal closures occurring from time to time, the arrival of goods in the market continues to move backward, and terminal inventory has fallen again and again, with the absolute value of inventory hitting a new low for the year. Although the downstream polyester industry is full of negative news from the year-end maintenance, due to the high maintenance expectations and the actual high start-up, the market has taken advantage of the low inventory and time lag operation to make bulls rise in the second half of the month, and the price violently rises, and the market in the second half of the month The price difference refreshed the understanding of the industry. The spot price difference widened to an extreme value of around 700 yuan/ton, and the highest spot transaction in the market reached 6,000 yuan/ton in the month. Then the price appeared at the inventory inflection point, and the supply of domestic MEG load increased and the supply gradually became abundant, and under the influence of some short sellers being eliminated, the price began to make a rational correction.
A brief overview of the port inventory
Figure 2 Domestic ethylene glycol main port inventory diagram in East China
As of December 26, the MEG port inventory in the main port area of East China is approximately 426,500 tons. Among them, Zhangjiagang has 199,000 tons; Ningbo has 95,000 tons; Shanghai and Changshu have 51,000 tons; Taicang has 44,500 tons; and Jiangyin has 37,000 tons.
In December, the comprehensive operating rate of domestic ethylene glycol was around 68%, of which the coal-based operating load was around 65%. The overall domestic supply remained low. The polyester end maintained its operating load at about 85%, and the import volume this month remained at a low level. The main port in East China continued the destocking pattern. The highest during the year was 1.436 million tons, which was a decrease of 1.042 million tons from the lowest, a decrease of 72.56%. .
Analysis and expectations for January 2020: With the commissioning of Hengli and Rongxin in December, the probability of increase in the two sets of devices in January is greater. In addition, as the Spring Festival approaches, polyester As the load decreases, inventory at East China’s main ports will show a slight increase in January.
Analysis and expectations for February 2020: With the increase in domestic production, the polyester load is slowly increasing, the overall domestic supply and demand pattern in February is relatively balanced, and the overall inventory in East China’s main ports has not changed much in February.
Analysis and expectations for March 2020: Hengli’s ethylene glycol unit will be put into mass production, Zhejiang Petrochemical’s ethylene glycol unit will enter trial operation, there will be a substantial increase in the country, and imports will remain Stable pattern, inventory accumulation in East China’s main ports was relatively large in March.
A brief overview of East China market prices
Figure 3 Domestic ethylene glycol price trends and three-month forecasts
As of the deadline for publication in December, the average monthly price of ethylene glycol market was 5,163 yuan/ton, higher than the previous month It increased by 539 yuan/ton or +11.66% and fell by 508 yuan/ton or -8.96% compared with the same period last year. Terminals continue to destock and spot volumes are tight. The squeeze in December drove spot prices to strengthen significantly.
Analysis and expectations for January 2020: Affected by the Spring Festival factors in January, the operating load of the polyester industry is expected to decrease to about 77%, and the terminal weaving industry will gradually enter the holiday starting from the end of December Status, accounting for 30%-40%, it is expected that the terminal will basically enter the rest stage by January 10-15; from the perspective of industry chain transmission, polyester will gradually change from low inventory to accumulated inventory in the later period; and from the supply side, With the recent restoration of MEG domestic factories, the overall supply side of the market has gradually become more abundant, and the turning point of terminal inventory has appeared. It is expected that the domestic ethylene glycol market will fluctuate downward in January, and the average monthly price is expected to be around 4,400 yuan/ton.
Analysis and expectations for February 2020: Domestic production has increased, and port inventory has accumulated due to the Spring Festival. The negative pressure on the supply side will continue. It is expected that domestic ethylene glycol will be in February 2020. Continuing the weak trend, the average monthly price is expected to be around 4,200 yuan/ton.
Analysis and expectations for March 2020: The mass production of Hengli and Zhejiang Petrochemical has caused major changes in the domestic supply pattern, and the purchasing willingness of the demand side has been suppressed. It is expected that in March 2020, domestic B Diol continues its weak trend, with the average monthly price expected to be around 3,900 yuan/ton.
Taking a comprehensive view: Whether ethylene glycol can continue its strong performance in December, the answer is no. However, force majeure factors cannot be ruled out, which may prevent the market from falling and may even rise again. Well, it happened several times in 2019. I won’t spoil the specific details, and let time verify it.
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