Yesterday, the ethylene glycol market opened higher and consolidated. Better, the market is paying attention to the OPEC production reduction meeting, and the operational caution has increased. Under the influence of weak fundamentals, shipments are concentrated on highs in early trading. The performance of futures is stagnant after opening higher, and the consolidation remains strong during the session. Spot discussions in East China are in late trading. Around 3,490 yuan/ton, spot negotiation in South China is around 3,750 yuan/ton. The current valuation of ethylene glycol is on the low side, and short-selling momentum on the financial side has weakened. However, with the restart of some ethylene glycol units, high port inventory and increasing domestic supply, Downstream polyester factories have concentrated on limiting production and shutting down under the pressure of negative profits and high inventory. The weak ethylene glycol industry pattern has put pressure on market operating confidence. In view of this, the domestic ethylene glycol market has maintained a low range in the near future.
On supply
Judging from the current domestic installation situation, although In the early stage, the prices of raw materials naphtha and ethylene rebounded sharply in anticipation of a rebound in crude oil, causing various domestic production processes to enter a loss-making state. However, the overall domestic operating rate is still expected to rise to above 60%, and domestic supply is likely to increase slightly.
From the import side, domestic supply has increased rapidly in recent years due to the wave of domestic equipment being put into production. However, due to the impact of the epidemic this year, ethylene glycol imported 4.6 million tons from January to May, and the import market increased year-on-year. Obviously, while the superimposed demand has weakened, port inventories have continued to reach record highs, reaching nearly 1.5 million tons. Currently, the storage capacity of mainstream liquid chemicals is tight, and port shipping schedules are obviously delayed. The short-term accumulation of inventory is expected to be maintained, which puts obvious pressure on the market rebound. But at present, the maintenance of Taiwan’s 1# and 4# devices started in mid-to-early July, and the Middle East and North America have had varying degrees of maintenance and load reduction. Secondly, the continuous strengthening of European prices has also reduced the favor of the Middle East and North American supply for the Chinese market. Based on comprehensive judgment, the probability of domestic import volume decreasing in August is still high.
On demand
At the beginning of the second half of the year, due to the arrival of the traditional textile off-season , the overall start-up of the downstream weaving industry is low, the weakness of terminal weaving combined with the repeated epidemic situation and the downturn of textile exports, the entire weaving industry will be in a stage of accumulation of inventory. The polyester yarn production and sales of polyester factories are low, the prices of various products have accelerated, and the cash flow of enterprises has declined significantly. , the pressure on the polyester sector to reduce production and reduce negative pressure has increased. Recently, some polyester factories without supporting industries have announced production reduction and shutdown plans. Among them, short fiber and bottle flake equipment are mainly for maintenance, and filament and slicing equipment are mainly for production reduction. Some factories said. If subsequent terminal demand cannot be effectively restored, production cuts may be further intensified. As the operating load of polyester declines, ethylene glycol stocks are expected to continue to rise, adding to pressure on market confidence. With the arrival of summer, terminals have entered the traditional consumption off-season. In addition, under the influence of public health events, terminal orders are not in good condition, high inventory and poor production and sales have given certain negative feedback to the market. The polyester end is expected to further reduce its burden, according to Longzhong The information data model estimates that the load of polyester at the end of July and early August is expected to decline further, and the load may drop to about 85%.
Forecast of the market outlook
Although the polyester end is expected to reduce the negative , but the magnitude of the reduction is small, and the demand for antifreeze in summer is good, which has a small impact on the overall demand for ethylene glycol. The shrinking import volume will alleviate the inventory pressure on the terminal to a certain extent, but the journey to the warehouse will still take a long time. Considering the valuation, the price of naphtha is still on the high side, and all processes of ethylene glycol are experiencing comprehensive losses. The valuation of ethylene glycol is on the low side. In addition, the market has abundant funds, and ethylene glycol with a low valuation is still attractive to a certain extent. Powerful. Taken together, although pessimism on the short-term demand side suppresses market trends, the downward space for low-valued ethylene glycol is limited, so don’t be overly pessimistic. </p
