Domestic ethylene glycol supply decreased, downstream polyester demand slowly increased, port inventory fell back, all kinds of good support, ethylene glycol prices were rising, so in September, supply is expected to increase, glycol prices drop space is limited, the market is stalemate, stalemate, stalemate, the reason is from the terminal.
Benefit one: supply reduction
Table 1 domestic glycol supply and demand balance sheet
Source: lung Chung As shown in Table 1, The overall supply of ethylene glycol decreased month by month, while the demand for downstream polyester increased, increasing month by month. In the latter four months, the supply was obviously insufficient.
Good two: inventory decline
Fig. 1 Comparison of domestic and Eastern main port stock and market prices in China
Source: lung Chung
As shown in Figure 1, entering the 2019, the domestic ethylene glycol market price has been in a downward path, falling to the middle of May, the lowest 4200 yuan / ton in the year. Domestic ethylene glycol production enterprises have no profits, shut down and overhaul more, started at 65%, down nearly 5%, while downstream polyester enterprises started to maintain between 85%-92%, and the demand is good. Port stocks rose to a record high of 1 million 436 thousand tons, and fell back to 860 thousand and 800 tons. At that time, prices did not follow up, and the market was so stalemate.
Good three: increase in downstream demand
Fig. 2 trend chart of polyester operation rate in China
Source: lung Chung
This month, the average operation of polyester industry was 87.48%, rising by 0.18%. The reason for the rise in the operating rate of the industry is that during the month, some of the devices were added to overhaul, such as Huaxiang and Pan Asia, but many sets of pre production and maintenance devices resumed operation, such as new Feng Ming, Tiansheng, Rong Sheng and Cheng Gao. Next month, though there are devices for maintenance and repair in the field, such as wankai 1 million 200 thousand tons and Halliday 200 thousand tons, but many sets of storage and restart are expected, such as Xinmin and Shihua, and in September there are still new production expectations, such as Heng Yi Haining 250 thousand tons, but the specific production plan remains variable. Therefore, the average start-up of polyester industry will rise to 89.79% next month, up 2.64% over the month.
The only bad thing: the terminal weaving industry is not performing well.
Fig. 2 trend of comprehensive weaving rate in China
Source: lung Chung
In August, the loom loom rate was 59.64%, and the ring ratio slipped by 1.61%. From the sample business survey results, at present, most of the finished products of the water jet looms are in 40-60 days, and the inventory of individual grey fabrics can reach 90 days. The large circle machines are mainly based on order production, and the inventory of finished products is mostly 7-10 days. On the whole, the news face has been reversed and the economic and trade frictions have been escalating. Market participants have indicated that foreign trade orders have shrunk, a decrease of about 4 compared with previous years. Turning to the domestic market, under the background of poor environment, the volume of orders in winter is limited. Local weaving mills have effectively increased the start-up situation by supplementing orders. However, the conventional inventory of many textile mills is slow to digest, and the orders are still tight. Some companies are stuck in the downtime state and continue to overlay their bearish emotions.
Conclusion: the overall domestic supply decreased, port inventory declined significantly, downstream demand slowly increased, multiple benefits led, ethylene glycol raised expectations. However, the inventory of finished products is high, foreign trade orders shrink, and domestic performance is the same. It is pessimistic about the market outlook.