The Rise In Crude Oil Helped Increase Ethylene Glycol Unimpeded.

The main port stocks of ethylene glycol in China are coming down well, and the expected volume of domestic ports is relatively small. Then the maintenance enterprises resumed their work in succession, and the new installations in the later period were more restrained. Ethylene glycol was blocked at 4800 yuan / ton. Mid autumn holidays force majeure (Saudi Arabia attacked), international crude oil rose, ethylene glycol as a downstream product, homeopathy breakthrough close to 5200 yuan / ton.

Rising prices due to high inventory demand


As shown in Figure 1, since June 2019, the domestic main port inventory of ethylene glycol has declined from a historical high of 1 million 436 thousand tons to 663 thousand tons. The market price began to rise in mid and late 8 months after the two month's deposition. From the low level of 4200 yuan / ton to 4850 yuan / ton, the polyester enterprises started to maintain more than 90% at the same time, and the demand was good and stable.

Force majeure, international crude oil rises, pulling glycol upward.

Fig. 1 Comparison of domestic prices of ethylene glycol in East China and international crude oil prices

According to foreign media reports, around 8 a.m. Beijing time in September 14th, Saudi Arabia's Saudi Aramco, located in Abqaiq's largest global crude oil processing center and the second largest oil field in the world, was attacked by a group of 10 UAVs, resulting in multiple fires and the fire has been under control at the time of Saudi. Yemen's Hu se army has claimed responsibility for the attack. For security reasons, Saudi Arabia temporarily closed down 5 million barrels / day of crude oil production capacity. Saudi Arabia claims that the affected capacity will resume in September 16th, but the news shows that the full recovery of its capacity may take longer. In response to this incident, the United States said it was ready to use strategic reserves at any time to prevent the supply gap in Saudi Arabia from giving a shock to the global oil market. Saudi Arabia also said it would use its crude oil stock to ensure that crude oil exports were not affected this week.

At the beginning of September 16th, international crude oil futures prices rose strongly, WTI rose 14% to 63.34 U.S. dollars / barrel; Brent rose 18% to 71.95 dollars / barrel, and the opening gains of WTI and Brent all hit the largest single day intraday rise since 1991.

At the beginning of September 16th, EG spot price rose 300 yuan / ton or 6.2%%, futures prices rose 4.99%, such a big increase is very rare, is the largest single day increase since December 10, 2018 glycol futures listing.

Summary: Saudi Arabia is China's most important importer of ethylene glycol, accounting for 45% of China's imports. Crude oil to naphtha to ethylene, the source of problems, will inevitably affect the amount of ethylene glycol in China. At this time, the supply of domestic products is limited, the port has the expectation of going to the warehouse continuously, the demand for polyester in the lower reaches is increasing steadily, the supply and demand pattern of the whole glycol is optimistic, and some people who are hyped up are in trouble. In September 16th, compared with the previous trading day, it increased by 360 yuan per ton, or 7.45% daily.

Ps: a quick analysis is like a tiger. Commodity analysis is no better than other unmanned aerial vehicles.