Since 2019, Ethylene glycol futures have maintained low adjustment after stabilization, and are now consolidated at 5150 yuan per ton. Industry insiders pointed out that the recent recovery of the crude oil market has brought support to the entire chemical market, but the glycol futures price is limited by its weak fundamentals and insufficient willingness to follow up. Future price rebound mainly depends on the inventory level, which takes some time.
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Insufficient willingness to follow price increases
In the spot market, the price of ethylene glycol in East China remained volatile last week, with weak market turnover and low interest in downstream purchases.
From the upstream crude oil market, since 2019, the overall performance of the crude oil market is strong, but recent data show that U.S. crude oil production reached a record high, and inventories rose for five consecutive weeks, so last week there was a slight decline.
Fundamentally, the data provided by Founder medium-term futures show that the current ethylene glycol load is 80.59%, of which the coal chemical load is 72.8%, and the current polyester load is 79.71% in demand, and the polyester gradually resumes operation.
In terms of inventory, the latest data from Jin Lianchuang show that the total inventory of ethylene glycol in East China on February 21 is 109.2 million tons, an increase of 26,000 tons compared with February 14. Among them, Zhangjiagang is 804,000 tons, Taicang is 117,000 tons, Ningbo is 76,000 tons, Jiangyin is 41,000 tons and Yangshan is 54,000 tons. Inventories in major ports continue to accumulate around the Spring Festival and have reached a new high in recent years.
“Persistent high inventory pressure and high start-up load of domestic ethylene glycol plant make the short-term factor of supply side continue to ferment in the near future. Therefore, ethylene glycol futures have become short-term targets for chemical products. Some hedging operations are in the form of short-term ethylene glycol futures, which makes the price of ethylene glycol insufficiently willing to follow up when chemical products rise, but become the fastest-falling production when they fall. Product. ” Gao Shihong, a chemical analyst at Jinlianchuang, told China Securities News.
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Xinda futures analysts Xu Lin and Han Bingbing said that the stock pressure in the ethylene glycol market is high, and the absolute volume is at a historical high. Under the pressure of high inventory, the profit of the ethylene glycol industry has been poor for about two months. Four sets of equipment involving 1.3 million tons in Jiangsu and Zhejiang are planned to reduce the load or stop, which may support the price of ethylene glycol in a short time. We need to pay attention to the specific situation of the later operation of the equipment.
It takes a long time to get out of stock.
Generally speaking, Liang Jiakun, a futures analyst at Fangzheng Medium Term, said that due to oversupply, stock accumulation, polyester load increased slowly, downstream demand was flat, and supply-demand pressure remained high. However, considering that some of the process cash flow of ethylene glycol is negative, there is limited room for prices to continue to fall, and low oscillation is expected to dominate in the short term.
“Recently, international crude oil continues to rise, ethylene and naphtha upstream raw materials of ethylene glycol have increased significantly, while ethylene glycol does the opposite and does not rise and fall, resulting in a variety of process ethylene glycol factories facing greater cost pressures. The increase in the price of ethylene glycol seems to be expected to be due to a reduction in the premium at the ethylene glycol plant, but there is no sign of that yet. Gao Shihong’s analysis.
Gao Shihong believes that even if there is a negative price reduction in the glycol plant, it will take some time for the effect to appear. Therefore, if the glycol market wants to get rid of the current predicament, it mainly hopes that downstream demand will turn around. With the improvement of demand in polyester factories, the market mentality gradually recovers after ethylene glycol enters the de-inventory stage. With the relatively low price, the price of ethylene glycol may have a wave of market, but from the current situation, it still takes a long time to enter the de-inventory cycle.
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