The rising price stimulates the starting load of glycol unit to rise, and the abundant supply of imported goods in the later period will inevitably put pressure on glycol market, and the price may peak in the later period.
With the Spring Festival approaching, the polyester starting load falls, the terminal weaving starting load is at a new low within the year, and the bearish atmosphere of glycol market heats up.
Production enterprises increase the intensity of commencement
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From January to November 2019, due to the oversupply of supply, the price of glycol rose briefly due to the market panic caused by the drone attack in Saudi Arabia in the middle of September, and remained in a low operating state for the rest of the time. Ethylene glycol production enterprises, especially those adopting non ethylene process with high cost, are suffering from continuous deterioration of business conditions and serious losses. Some enterprises are forced to shut down their units to reduce losses. Affected by this, the problem of ethylene glycol supply exceeding demand has been alleviated, and the industry has entered the de stocking cycle. As of January 16, 2020, the ethylene glycol inventory in East China is 353000 tons, which is 886000 tons less than the historical peak on April 25, 2019, a decrease of 71.51%. The inventory has been at a low level for many years, and the market supply and demand pattern has improved. Since December 2019, the price of glycol has risen sharply, up nearly 15%.
With the continuous rise of glycol price, the operation of glycol production enterprises has improved. The gross profit of coal to glycol is 157 yuan / ton, methanol to glycol is – 956.2 yuan / ton, ethylene to glycol is – 63 dollars / ton, naphtha to glycol is – 4.54 dollars / ton. In this case, the start-up load of coal preparation plant is significantly increased. As of January 14, the operating load of non ethylene glycol unit was 74.57%, 29.06% higher than the low point in 2019; the operating load of ethylene glycol unit was 68.85%, 10.48% higher than the low point in 2019. At present, in addition to the long-term shutdown devices and some EO conversion devices, most of the devices have been restored to production, and the supply of domestic market is gradually released.
In the international market, most of the glycol units are in normal operation, and there are few maintenance units, which leads to the relatively low price of imported glycol, and the import arbitrage space reaches 300 yuan / ton. Under the stimulation of profits, a large number of domestic ethylene glycol imports are expected to be concentrated in Hong Kong in the first quarter. The starting load of domestic units has been increased, a large number of imported goods have poured in, and the supply of glycol is sufficient in the future.
After the year, the downstream replenishment may be less than the previous years
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Near the Spring Festival, the downstream polyester enterprises have a large area of parking and maintenance, and the starting load of the terminal weaving industry is at a new low in the year. As of January 17, the starting load of polyester enterprises was 77.04%, 2.12% lower than that of the same period in 2019; the starting load of weaving enterprises was 25%, 37% lower than that of the same period in 2019. Of course, the starting load of weaving enterprises is significantly lower than that in 2019, which is largely the reason for the earlier spring festival this year. However, at present, the inventory of polyester enterprises is higher than that of previous years. As of January 16, the POY inventory of filament is 8.5 days, an increase of 4.5 days or 112.5% compared with the same period of 2019; the DTY inventory of filament is 20.5 days, an increase of 11.5 days or 127.7% compared with the same period of 2019; the FDY inventory of filament is 13 days, an increase of 6 days or 85.7% compared with the same period of 2019; the short polyester fiber inventory is 4.96 days, a decrease of 0.04 days or 0.8% compared with the same period of 2019. This means that after the Spring Festival, the replenishment of downstream polyester enterprises may not be as strong as that of previous years, and the demand for glycol will be restrained.
Forecast for future market
Combined with the above analysis, since it is difficult to hedge the supply increase due to the demand increase, the glycol market will return to the stock accumulation cycle, and the price will continue to decline. In terms of operation, short orders in the early stage continue to be held, and investors who do not enter the market can see a rebound
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