Ethylene Glycol Declines Nearly 50% Productivity Growth For 8 Months

In July 9th, some of the domestic futures market declined, and ethylene glycol and zhengmian futures fell to a new low.

As of the end of June, the domestic ethylene glycol market has been declining for 8 months, and the price has fallen from the peak of 8000 yuan / ton to the current low of 4200 yuan / ton, with a cumulative drop of nearly 50%. In the later stage, with the arrival of the peak of the new project, the overcapacity of ethylene glycol will become more and more obvious, and the market competition at home and abroad will further intensify.

Market for profit, capacity to usher in a substantial growth in the next big shuffle!

At present, both ethylene and ethylene glycol enterprises are facing losses. Nevertheless, the production enterprises are still operating at a high load, replacing profits with the market, and responding to domestic blowout capacity growth and competition from foreign suppliers.

Some synthetic gas to ethylene glycol manufacturers plan to start maintenance in the two quarter, while downstream polyester demand for better, but under the pressure of high storage, glycol market is still difficult.

It is understood that the high storage dilemma of ethylene glycol market mainly comes from the rapid growth of production capacity. By the end of 2018, the annual production capacity of ethylene glycol in China reached 12 million tons, accounting for 32% of the world's annual capacity, of which the annual output of syngas to ethylene glycol was about 5 million tons, accounting for 42%. In 2018, the annual capacity of ethylene glycol in China increased by 2 million 150 thousand tons, with an annual growth rate of 22%.

Analysis of the industry, the current supply of ethylene glycol oversupply is just beginning, the real challenge is yet to come. In the next 5 years, global glycol production capacity will usher in a significant growth. Abroad, many large projects have been launched in North America, Middle East and South Asia. These devices mostly use cheap ethane as raw material and have strong international competitiveness. In China, 6 million ~700 million tons of annual capacity plan was put into operation in 2019. In 2020~2025, the annual production capacity of the project was 15 million tons.

The centralized delivery of new capacity will make China's ethylene glycol face great competition pressure. It is expected that by 2025, the market will enter a full surplus stage, and the industrial structure will usher in a major reshuffle.

The import volume is high, and the hidden danger of short-term high storage is still hidden.

China's high ethylene glycol storage dilemma has also come to its high import volume.

China is the largest ethylene glycol demand market in the world, attracting global sources of supply. According to statistics, the import of ethylene glycol reached 9 million 800 thousand tons in 2018, an increase of 12% over the previous year. From the perspective of importing countries and regions, Saudi Arabia, Canada, Singapore and China's Taiwan region are the main force of China's import market. In the first half of 2018, polyester boom was higher, domestic glycol market was better, import volume increased significantly, domestic capacity increased in the second half of the year, and import volume remained stable.

Although ethylene glycol is a threat to ethylene production by syngas, ethylene glycol has not been completely replaced. It is expected that ethylene glycol imports will remain high in the near future.

The supply side has not yet been improved, and most enterprises ignore the latter market.

Due to the revival of the textile industry, the main downstream of ethylene glycol -- polyester industry began to recover from the second half of 2016, and entered the peak period of capacity expansion in 2017~2018.

By the end of 2018, China's polyester production capacity increased to 54 million tons, equivalent to ethylene glycol consumption of about 18 million tons. According to industry estimates, the boom of textile industry has gradually declined since 2019, and the growth of polyester production has been falling down. The growth of ethylene glycol demand in the future may not be able to keep up with the growth of production capacity.

In the recent polyester factory survey, it is generally recognized that ethylene glycol is in an excess supply stage, and this state is continuous and has not improved. In the future, with the new production capacity of ethylene glycol and the negative feedback from downstream, the pressure of the traditional off-season from 6 to July will be greater than that of last year's three quarter and four quarter.

Tiansheng chemical fiber responsible person told reporters that due to the early expansion of the downstream warp knitting capacity is serious, the textile market is weak this year, the recent two high production and marketing is due to the upstream raw material prices to promote the downstream goods enthusiasm, the rest time to just need procurement. For the weaving Market, the biggest problem at present is the high inventory of grey cloth, which is not unacceptable for enterprises. The profits of weaving enterprises can still be maintained and there is no large-scale parking in the short term. Therefore, the future inventory of finished goods will be strong in the future.

Similarly, the head of Jiabao polyester is not very optimistic about downstream consumption. "July is about to enter the off-season sales, grey cloth inventory is difficult to reduce, but the terminal can resist." The responsible person said that the downstream weaving enterprises have been expanding their production capacity. They have been ahead of schedule in anticipation of their needs, and now they are big enough to meet the demand for orders at any time. In addition, at present, some export orders have been reduced, while the ready export products are hard to sell domestically, and their products are constantly accumulating and stock raising.

In Zhu Chao's view, the short-term rebound in spot prices of ethylene glycol is rather difficult. Although the absolute price of polyester factories is low, polyester factories are willing to take stock when prices rebounded, indicating that they are pessimistic about the downstream.

However, according to Hengyi Petrochemical responsible person, there will be opportunities for domestic and export of polyester products in the future.

Domestic demand is affected by two factors: first, home textiles, according to the data of real estate construction before, the more completed in the future, the demand for home textile driven by real estate will be better than before; the two is clothing, and the overall consumption of the autumn winter clothing in the second half of the year is greater than that in the first half of the year, and the demand for polyester is better.

At the same time, the industry has already raised the alarm bell for the production capacity of glycol.

Recently, the Federation of petroleum and chemical industries of China issued the "early warning report on key chemical products production capacity in 2019", warning the majority of capacity growth including ethylene glycol. In April 8th, the national development and Reform Commission issued the guidance list of industrial restructuring (2019 edition, draft). It recommended limiting the construction of ethylene glycol installations below 200 thousand tons / year, and abolished the encouragement policy for the production of ethylene glycol production equipment of 200 thousand tons / year or above. (source: petrifaction, futures daily)