Ethylene glycol prices have been oscillating since early August. The main futures prices have risen from the initial low of 4275 to around 4700, with a rebound of nearly 10%. Spot prices have broken through the front line of 4800, showing a stage-by-stage strong trend. However, the short-term strong deduction is more difficult for the medium and long-term strong. Pressure has begun to appear around 4800, and the momentum for sustained upward movement is temporarily insufficient.
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De-inventory Supports Short-term Price Recovery
On the one hand, downstream demand is good, and the peak season trend of “gold, nine silver and ten ten silver” gradually appears, and the consumption of raw materials has increased. As far as the weaving process is concerned, the low start-up in the second quarter slowed down the demand for raw materials. After August, the weaving load improved significantly. The loom start-up rate of Jiangsu and Zhejiang, the main producing area, rose to about 76% in early September. At the same time, the stock days of grey fabrics in weaving enterprises also showed a downward trend. The production and marketing of textile city and polyester products also warmed up in August. Taking filament as an example, the average production and marketing rate of filament in August was around 90%, and in early September it rose to about 114%. The average daily sales of Textile City long-fibre fabrics are over 9 million meters, which is higher than the average level of 7 million meters per day in August. Within the week, the stock days of sample weaving enterprises in Shengze area were 39.5 days, and the volume of light textile city market was in seasonal recovery.
With the improvement of terminal demand and the digestion of polyester stocks in June-July, the comprehensive stocks of polyester filament and polyester staple fibers are at the lowest level in the year, about 8.1 days. All of these lay a good foundation for increasing the load of polyester. The unit load of polyester links began to rise in August. By early September, it had risen to a high near 92%, higher than the same period in the previous two years. At the same time, with the production of new Fengming and Tongkun plants in August, the production capacity of polyester increased to 56.81 million tons, compared with 51.96 million tons in the same period last year. As a result, the output of polyester increased in August due to the high capacity base and start-up rate, and the demand for raw material ethylene glycol also increased.
On the other hand, the load of ethylene glycol coal production and the decline of imports ease the supply pressure in its stage. From the perspective of domestic supply, the monthly output of domestic ethylene glycol increased at an average rate of about 30% from January to June this year, while the imports in the same period were basically the same as last year, with limited shrinkage and excessive overall supply over demand, which led to the continuous accumulation of ethylene glycol. However, the high inventory of ethylene glycol has depressed its price. Under the constant squeeze of profits in the ethylene glycol industry, the maintenance and parking of domestic ethylene glycol enterprises have become frequent and lasting. Especially in the coal-based ethylene glycol industry, its load began to drop rapidly after reaching a high of 89% in April, and dropped to a low of about 43% in August. During the period, the load of high quality glycol also decreased synchronously, but the range was less than that of coal. The load of methanol production is relatively stable, but the supply of methanol production is limited and has little effect. Affected by this, the overall domestic production of ethylene glycol decreased significantly from July to August. In August, the output data even decreased by 6.9% compared with the same period last year. Domestic output increased from high growth to negative growth.
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On the import side, the import of ethylene glycol fell sharply in June, and the import volume fell 14.8% in the same month compared with the same period last year. Although the import volume rose annually in July, it still fell by 2.9% compared with the same period last year. The decline in imports is reflected in the decline in the arrival of ethylene glycol. And the start of downstream peak season demand, led to the increase of ethylene glycol port shipments. As a result, high ethylene glycol inventory gradually entered the depot, and depot accelerated after July. As of early September, ethylene glycol port inventory fell to 877,000 tons, although still higher than the same period last year, but the depot trend is expected to continue before the end of the downstream peak season.
Therefore, in the peak season, the domestic ethylene glycol continued to depot more likely, the price of superimposed crude oil rebounded to the formation of a more multi-tone chemical products, ethylene glycol market continued more trend.
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