The overall expectation of the market is pessimistic
In recent years, due to the strong demand of polyester industry, the demand for glycol in the domestic market has maintained a rapid growth trend. Since entering the 21st century, the apparent consumption of glycol has continued to increase significantly. In 2002, it broke through 3 million tons, reaching 3.0199 million tons, becoming the world’s largest glycol consumer country surpassing the United States. Due to the rapid growth of demand, it has promoted the increase of glycol production capacity. In recent years, many large-scale glycol production units in China have been completed and put into operation. With the increasing production capacity of glycol in China, the output is also increasing.
| Benzalkonium chloride |
Although the production capacity and output of ethylene glycol in China are growing rapidly, it still can not meet the growing market demand of domestic polyester and so on. A large number of imports are needed every year, and the import volume is increasing year by year. At present, glycol products in China are mainly used to produce polyester, antifreeze, adhesives, paint solvents, cold resistant lubricants, surfactants and polyester polyols. Among them, polyester is the main consumption area of glycol in China, accounting for 94.0% of the total domestic consumption, and about 6.0% is used for antifreeze, adhesives, paint solvents, cold resistant lubricants, surfactants and polyester polyols. In recent years, the production of polyester (including polyester fiber, polyester resin and film) in China has developed rapidly. In 2010, the production of polyester will reach about 19 million tons, and the demand for glycol will reach about 6.65 million tons. In addition to the consumption of antifreeze and other aspects, it is expected that the total demand of glycol in China will still maintain a rapid growth.
At present, the supply of ethylene glycol is still in a medium low state, with 57.11% of the total domestic ethylene glycol starts (down), 60.24% of the non coal load (stable), and 52.69% of the coal production (down). Glycol prices fluctuated across the board, and the spot price in East China closed at 4630-4640 yuan / ton. The market supply is still at a relatively low level, which to some extent supports the mentality of the industry; the downstream polyester price has a narrow boost, but the substantive transaction is still poor; under the interweaving of long and empty markets, the transaction is light.
According to the production capacity data of CCF, currently it is known that the ethylene glycol production capacity that may be affected is 600000-800000 tons per year, and 40% – 50% of Saudi Arabia’s production capacity is exported to China. It can be considered that the impact on the domestic glycol supply will be at the level of 300000-400000 tons per year, affecting the operating rate of 3% – 4%. Whether there is likely to be a more serious impact in the future or whether there is a shortage of raw materials in other factories remains to be tracked, and geopolitical factors have become an unpredictable fuse in the glycol market. In addition, if there is no other accident, the lack of supply in import is likely to be filled by the increased domestic load with the increase of glycol price. Not only that, with the domestic price rising, the increase of import volume is also likely to occur.
| Sodium Molybdate |
The operation rate of ethylene glycol plant in China is about 60.24%, with a rise in the month on month ratio. The operation rate of coal glycol is about 68.22%, returning to the normal level. The MEG port inventory in East China’s main port area is about 498000 tons, an increase of 13000 tons compared with last week. The starting load of polyester plant is about 89.49%, which is still high. The production and sales of polyester are about 55%, and the sales volume has increased. On the basic level, the crude oil market fluctuates and is affected by weak sentiment, and the downstream polyester end demand is still at a low level, with further negative expectations, and the overall market expectations tend to be pessimistic.
From the perspective of the market, the main eg 2001 contract of glycol futures fell sharply in the early stage. After two or three weeks of narrow banner oscillation, it accumulated strength and fell again in large volume. The MACD green column index continued to spread, indicating the launch of another wave of declining market. Therefore, it is expected that after EG2001, the market will continue to be weak, with a high probability of further decline.
Based on the above judgment, we chose the trading strategy of shorting glycol Futures: establishing a short order of glycol 2001 contract, with an entry range of 4470-4500, a target price of 4000-4460, a stop loss price of 4510-4800, and entering in batches, with a total of no more than 60% of the total capital.
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