Good Market Will Be Exhausted, Ethylene Glycol Rise Height Is Limited

Since mid July, the market negotiation price has risen slowly. The main influencing factors are that the raw material price remains high and fluctuates, which provides strong cost support for ethylene glycol. Domestic ethylene glycol enterprises start to operate at a low level, and the overall supply continues to decrease. Although the import source has increased, due to the limitation of storage capacity, the downstream polyester just needs to be stable. However, as the price goes up, some enterprises' profit points rise and restart one after another. In addition, with the commissioning of new units, the overall supply will increase, and the only good will turn into bad, or the rising height of ethylene glycol will be restrained.

Figure 1 price trend of domestic ethylene glycol Market

Source: Longzhong information

Since the middle of July, ethylene glycol in China has got rid of the decline and entered a rebound cycle. Crude oil remained high in the month, which provided strong cost support for ethylene glycol. On the basis of supply and demand, the new ethylene glycol plant released later in the month, and under the low load operation of existing units, the domestic production has continued to decrease since 2020; on the import side, affected by force majeure, regional arbitrage and other factors, the expectation of foreign contract reduction boosted the market sentiment. In August, under the influence of high polyester production and capacity base expansion, the domestic production of ethylene glycol plant was increased, The downstream polyester just needs to pick up the goods, which leads to the improvement of the overall delivery of the terminal, and the expectation of inventory going to the warehouse is slowly reflected. In August, under the social balance and the benign promotion of the fundamentals, ethylene glycol rose significantly in the last ten days. As of August 31, the price of ethylene glycol in East China closed at 3840 yuan / ton, with an average monthly price of 3724 yuan / ton, up 5.71% month on month.

Table statistics of domestic ethylene glycol plant restart and new commissioning

Unit: 10000 tons

Source: Longzhong information

As can be seen from the above table, Xinhang and hongsifang units have plans to restart in September. The newly added parties pay attention to the incremental progress of Zhongke and SINOCHEM Quanzhou, and the overall supply is likely to increase slightly. The terminal inventory gradually entered into a steady de stocking cycle nine In terms of month, polyester plant maintenance, new investment and restart coexist, and the output is expected to decline slightly compared with August. Therefore, ethylene glycol inventory in the main port of East China remains high.

On the whole : at the supply side, there is no enterprise device maintenance in the near future, and the actual supply will be increased if new units are restarted and put into operation. In terms of import, affected by the opening of regional arbitrage window, centralized maintenance of North American devices and shipping schedule, it is expected that the import volume and inventory will decrease before the end of the year, and the port inventory may decrease steadily, or the speed may be very slow. On the demand side, polyester plant maintenance, new investment and restart coexist, and the output is expected to decline slightly compared with August. When the supply has not been reflected in the market, the market price may remain at the current high level in early September. When the supply increases and the only good is exhausted, the market price may fall again.