Since the end of October, ethylene glycol has entered the decline mode again. Although there has been occasional rebound during the period, the overall performance is still weak; as of November 16, the main contract of ethylene glycol, eg2101, closed at 3682 yuan / ton. For the future market, we believe that the overall trend of ethylene glycol is still weak due to the production of new production capacity and the gradual entering of the off-season at the demand side. However, under the support of cost, the falling range of ethylene glycol futures price will also be limited.
| Gamma Polyglutamic Acid |
Capacity expansion has not yet ended, glycol supply pressure is still large
In 2020, a number of domestic chemical products will usher in the stage of centralized production capacity, and ethylene glycol is one of them. At the beginning of the year, three units of Hengli Petrochemical (600346, Guba), Zhejiang Petrochemical and Inner Mongolia Rongxin chemical were put into operation, especially the large-scale oil processing units of Hengli petrochemical and Zhejiang Petrochemical, which greatly increased the domestic ethylene glycol production capacity; at the end of the third quarter, the commissioning of Shanxi Huaneng, Sinochem Quanzhou and Zhongke refining and Chemical Co., Ltd. further improved the domestic ethylene glycol production capacity. In November, the production capacity of ethylene glycol in China continues. In early November, the 200000 t / a plant in Yongcheng, Henan Province and the 600000 T / a unit in phase 4 of Xinjiang Tianye (600075, Guba) were discharged smoothly, and the unit load was steadily increasing; In the later stage, the production capacity of 4 sets of units, including Hubei sanning, Yanchang Petroleum, Jianyuan coal coking and Shaanxi Weihua, is planned to release production around December. If the plant commissioning plan goes smoothly, the domestic ethylene glycol annual production capacity will exceed 17 million tons to 17.221 million tons by the end of 2020, a substantial increase of 6.19 million tons compared with the end of 2019, with an increase of 56.11%.
Due to the influence of processing profit, most of the time of domestic ethylene glycol plant start-up in 2020 is lower than that of previous years, and the comprehensive daily operating rate in the middle of the year once dropped to 50%. However, the large expansion of the capacity base makes the domestic ethylene glycol supply still increase significantly in 2020. In October 2020, the domestic ethylene glycol output will be 738000 tons, an increase of 158400 tons compared with the same period in 2019; in the first 10 months of 2020, the cumulative domestic ethylene glycol production will be 7.137 million tons, a substantial increase of 1.0331 million tons compared with the same period in 2019, with an increase of 16.92%. According to the latest production capacity and start-up data, on November 17, the daily production of ethylene glycol in China was about 26300 tons, an increase of 6400 tons compared with the same period in 2019; with the successive introduction of new production capacity in the later stage, the domestic ethylene glycol production is expected to be further improved, and the supply pressure of ethylene glycol is still large.
The downstream market is gradually entering the off-season, and the demand for ethylene glycol is expected to weaken
With the end of the “double 11″ consumer Festival, the terminal weaving market has gradually entered the off-season, while overseas Christmas orders are no longer “hot” in previous years, which further weakens the performance of the terminal market. At the end of October, the start-up of looms in Jiangsu and Zhejiang began to decline. As of November 16, the daily operating load of domestic Jiangsu and Zhejiang looms was 91.03%, which was significantly increased by 16.03 percentage points compared with the same period in 2019, but it was 2.91 percentage points lower than the peak at the end of October. Corresponding to the decline in construction, finished product inventory began to show signs of accumulation. As of November 16, the grey fabric inventory of weaving enterprises in Shengze area was 40.5 days, 3 days higher than that in the same period in 2019, and 0.5 days higher than that in early November.
Compared with the weaving end, the polyester market directly downstream of ethylene glycol turns pale earlier. Compared with polyester production and sales, most of them have been stable since the end of 10 weeks of continuous production and sales. As of November 16, the daily operating load of domestic polyester plants was 86.29%, 1.37 percentage points lower than that of the same period in 2019. In the week of November 12, the weekly average production and sales rate of domestic polyester chips was 121.84%, increased by 19.84 percentage points compared with the same period in 2019; the weekly average production and sales rates of polyester staple fiber and filament were 110.59% and 89.18%, respectively, which were 22.59% and 5.18% higher than the same period in 2019.
Import ship and cargo decreased month on month, ethylene glycol port inventory continued to go to the warehouse
| Gamma Polyglutamic acid food grade |
Although the significant increase of domestic ethylene glycol production capacity in 2020 will reduce China’s dependence on ethylene glycol, affected by the new global epidemic situation, China, which is the first to enter the “post epidemic” era, has become the best destination for international trade of ethylene glycol, which also leads to the high import volume of ethylene glycol in China. After entering September, due to the continuous impact of several hurricanes in the United States, several sets of ethylene glycol units in the local area were forced to stop. After losing a major import source country, China’s ethylene glycol import ships and cargoes decreased month on month. According to the latest statistics of the customs, in September 2020, China’s import of ethylene glycol was 994400 tons, a decrease of 46700 tons compared with August, a significant increase of 248200 tons compared with the same period in 2019; in the first three quarters of 2020, the cumulative import volume of ethylene glycol in China reached 8.628 million tons, an increase of 1.206 million tons compared with the same period in 2019.
The direct result of the high import volume in the early stage is that the domestic ethylene glycol port inventory remains at a high level. In late May 2020, ethylene glycol inventory in East China ports rose to more than 1.29 million tons for the first time, exceeding the peak of port inventory in 2019. Since then, port inventory has continued to accumulate, and the inventory has risen to 1424200 tons by July 20, setting a record high of ethylene glycol inventory in East China ports. With the decrease of import cargo in September, the port inventory has also entered the stage of continuous de stocking. However, due to the large amount of accumulated stock in the early stage, the absolute quantity of ethylene glycol port inventory is still at a high level. As of November 16, the ethylene glycol inventory in East China port was 1087800 tons, 336400 tons lower than the peak on July 20, and increased by 660800 tons compared with the same period in 2019.
The overall profit situation is poor, and the ethylene glycol cost support performance is strong
Despite the impact of the new outbreak, the trend of raw material prices of the two ethylene glycol processing technologies of oil and coal is indeed different: naphtha, the raw material of oil to ethylene glycol, has been operating below 400 yuan / ton in recent years due to the influence of international oil price, which has a significant drop compared with the previous year’s level, while the raw material coal for coal to ethylene glycol has shown a slow rise trend in the near future. The difference of raw material price trend leads to a big difference in the profit of oil and coal processing technology. Thanks to the sharp drop of international oil price in 2020, the processing cost of oil to ethylene glycol is obviously reduced, and the advantage of processing cost of coal to glycol is no longer existed. Except for July, in most of 2020, the oil to ethylene glycol can maintain a certain processing profit, while the coal to ethylene glycol is in a large loss state for a long time, and the processing profit is close to – 1500 yuan / ton at the lowest time. In view of the two oil and coal processes, the current overall ethylene glycol processing profit performance is poor, so in the case of no further decline in raw material prices, glycol cost side will get strong support. According to the estimation, as of November 16, the domestic oil to glycol processing profit was 195 yuan / ton, and coal to glycol processing profit was – 978.2 yuan / ton.
summary
From the perspective of supply and demand pattern, there are still a number of new ethylene glycol units to be put into operation in the later stage. With the increase of production capacity, the supply of ethylene glycol is expected to further increase. In terms of demand, with the end of overseas Christmas orders and domestic traditional consumption peak season, polyester and even terminal weaving materials will gradually enter the off-season, and the demand for ethylene glycol is expected to weaken. Recently, the ethylene glycol inventory in East China port has been continuously removed. However, due to the absolute quantity of ethylene glycol still exceeds one million tons, the pressure on ethylene glycol inventory is still great. At present, the profit performance of the two oil and coal processing technologies is poor, and ethylene glycol is expected to obtain strong cost support without a significant drop in raw material prices. On the whole, we believe that the aggravation of the contradiction between supply and demand and the support from the cost side limit the rise or fall of forward price, and ethylene glycol will operate in a weak shock mode in the later period.
| http://www.gammapolyglutamicacid.com |