The Cost Side Has Eased, And Ethylene Glycol Is Looking For A Rebound?

In the wake of the improvement in the external situation during the Dragon Boat Festival, the paction price of glycol in the spot market has risen this week. Although the mainstream reservoir area has good delivery during the holiday season, the high inventory has not been alleviated.

So what is the trend of ethylene glycol market this week?

Cost side begins to rebound

After the first round of oil slump, oil prices have been temporarily suspended by OPEC's extended production cuts, the US's continuing sanctions against Venezuela and Iran, and the expected rate increase in the US Federal Reserve. The absolute price of PX and PTA is expected to stabilise temporarily.

From the relative price point of view, the current PX- naphtha oil price difference is 352 US dollars / ton, which is only one step away from the theoretical processing cost of US $300 / ton, and recently, many PX devices in Northeast Asia begin to be overhauled because of the poor profit situation, so the relative price of PX is expected to stabilize.

Supply side eased

Ethylene glycol production continued to deteriorate due to the continuous downward impact of ethylene glycol prices.

At present, the production equipment of all kinds of ethylene glycol in China is in a state of loss.

Under such circumstances, the production enthusiasm of ethylene glycol production enterprises is relatively poor. At present, the start-up load is only about 65%, which is a low level in recent years.

In June, 4 sets of 800 thousand tons of Yongjin chemical plant and the ethylene glycol plant of Hengsheng chemical and Qian Xi coal chemical industry will be overhauled. If the profits of glycol production enterprises can not be repaired, the enterprises with pre maintenance will delay the overhaul period, while the enterprises still in production are hard to maintain. The load will further decline, and the domestic oversupply problem will be alleviated.

Port stocks remain high

According to statistics, as of June 6th, the port of East China Sea port ethylene glycol inventory of about 1 million 163 thousand tons, compared with the end of May was flat.

Among them, 85.8 tons in Zhangjiagang, 10 thousand yuan less than the ring, and 9900 tons a day in a mainstream warehouse; 76 thousand tons in Ningbo, an increase of 14 thousand tons in the ring; 80 thousand tons in Shanghai and Changshu, 3 thousand tons in the ring; 111 thousand tons in Taicang, 11 thousand tons in the ring, and an average daily delivery of about 4800 tons in the mainstream reservoir area; 38 thousand tons in Jiangyin, an increase of more than an average of 111 thousand tons.

It can be seen from the data that port inventory is still high.

The demand side is hard to see.

Demand is still difficult to see significant improvement, polyester production and sales data still no significant change.

The overall polyester operating rate is still around 86.79%.

In addition to staple fiber, polyester cash flow began to improve, and some polyester factories began to plan to restart the equipment step by step.

But at present, the number of stocks in terminal weaving enterprises is still high. Basically, they are purchased on demand, and the wait-and-see mood is much more.

The overall textile industry has entered the off-season state, and some spinning mills also have planned parking plans, which will have an impact on polyester, while the possibility of polyester storage is also increasing.

It is difficult to stimulate the consumption of ethylene glycol.

To sum up, the main port arrival volume of ethylene glycol is around 190 thousand tons this week, and port inventory is expected to rebound.

Fundamentally speaking, with the gradual increase in polyester load, demand side rigid support is stronger, and the glycol removal rate increased in June.

In the process of supply and demand improvement, the low level of ethylene glycol spot market is supported.

Coupled with the recent rebound in naphtha prices, it is expected that the short-term market of ethylene glycol is expected to continue to rebound.

(source: Guo Ye net, China Everbright futures)