Focus:
1. China’s MEG production capacity increment will hit a record high of 5.84 million tons in 2021, an increase of 42%, which is 27% higher than the demand growth
2. China’s MEG production is expected to reach 10.2 million tons in 2021, an increase of 14.62%
3. The decline in import volume in 2021 will reach one million tons. It may reach around 10.15 million tons, and imports are expected to decline by 8.34% year-on-year
4. The increase in MEG consumption in 2021 is expected to slow down to around 370,000 tons
5. High inventories will become the norm, and port inventories are expected to accumulate around 100,000 tons at the end of 2021.
1. China’s MEG production capacity increase will hit a record high of 5.84 million tons in 2021, an increase of 42%, which is 27% higher than the demand growth
According to Longzhong data, a comparison of MEG annual production capacity and spot prices from 2011 to 2020 found that the correlation coefficient between the two was -82.93%, and there is Strong correlation, negative correlation.
From 2011 to 2020, EG production capacity increased by 11.81 million tons, an increase of 305%, and an average annual growth rate of 13%. The average price of MEG fell from 9182 in 2011 to 3848 in 2020. , a decrease of 58.09%. Data shows that as production capacity increases year by year, the average price of MEG declines at an average annual rate of 9.21%; especially in the past ten years, MEG has experienced three waves of concentrated capacity expansion in 2015, 2018, and 2020, of which production capacity increased by 265% in 2015. million tons, an increase of 48%. The average price fell by 840 yuan that year, a decrease of 14%; the increase in production capacity in 2020 hit a record high. The production capacity increased by 4.65 million tons that year, an increase of 42%. The average price hit a new low since 2007, to 3848 yuan. / ton, a decrease of 23%;
Learning from history, we can know the rise and fall: In 2021, according to statistics from Longzhong Information, domestic new MEG production capacity will be 5.84 million tons, and the increase in production capacity will once again Refreshing a record high, production capacity growth is expected to reach 37.25%. The production capacity of PET in the main downstream field will grow by 9.6% in 2021, and the supply growth rate is 27 percentage points higher than the demand growth.
Source: Longzhong Information
2. China’s MEG production is expected to reach 10.2 million tons in 2021. Increase of 14.62%
Data source: Longzhong Information
According to Longzhong data, a comparison of MEG annual output and spot prices from 2011 to 2020 found that the correlation coefficient between the two was -79.62%, indicating a strong negative correlation.
Data show that China’s MEG output in 2020 was 8.89 million tons, an increase of 6.02 million tons compared with 2011, an increase of 210.54%, and an average annual growth rate of 13.42%. During the same period, the annual average price was In 2011, it fell by 5,334 yuan, with a cumulative decline of 58.91%, and an average annual decline of 9.21%.
In terms of annual production increment, the average annual production growth from 2013 to 2016 was 532,400 tons, with an average annual growth rate of 11.7%. During the same period, the MEG price in 2016 dropped by 2,379 tons compared with 2013. Yuan, a decrease of 10.08%; as MEG production capacity exceeded 10 million in 2018, the average annual output from 2018 to 2020 increased by more than 1 million tons to 1.02 million tons/year. What is particularly noteworthy is that in 2019, the increase in output It broke through 1 million tons for the first time and reached around 1.34 million tons. During the same period, the price dropped from 7244 yuan in 2018 to 3848 yuan in 2020, with a cumulative drop of 3396 yuan, a decrease of 46.87%, which was almost halved.
It is expected that 5.84 million tons of new production capacity will be put into operation in 2021, including 3.88 million tons of petroleum-to-ethylene glycol units and 1.96 million tons of coal-to-ethylene glycol units. Refer to the commissioning of new units. It is expected that the increase in production released that year is expected to be 3.49 million tons; at the same time, according to the maintenance plan of in-production enterprises surveyed by Longzhong in 2021, the loss from MEG production reduction in 2021 is expected to be 2.18 million tons (excluding conversion to EO). It is expected that in 2021 The annual production increase after hedging is 1.3 million tons, and the total volume is expected to reach 10.2 million tons, an expected increase of 14.62%.
3. The import volume will decline by as much as one million in 2021, or to around 10.15 million tons , imports are expected to decline by 8.34% year-on-year.
Data source: Longzhong Information
According to Longzhong data, a comparison of MEG annual output and spot prices from 2011 to 2020 found that the correlation coefficient between the two was -68.85%, indicating a strong negative correlation.
In 2021, China’s MEG import dependence is 55.49%. Imports are the main component of domestic supply. As of 2021, China’s MEG imports are 11.07 million tons, an increase of 3.85 million tons compared with 2011. , an increase of 53.37%, with an average annual growth rate of 4.87%. During the same period, prices fell by 5,334 yuan, a decrease of 58.09%, with an average annual decrease of 9.21%.
From the perspective of the growth pattern of import volume, the changes in imports in the past ten years can be divided into three stages. The first stage: 2012-2015, China’s MEG import increase was between 20- Between 700,000 tons, the average annual increase is 38.47%, the average annual growth rate of stage imports is 2.19%, and the price fell by 4.65% during the same period;
The second stage: MEG production capacity growth in 2016 5.4%, output increased by 14.03%, downstream PET production capacity dropped from 4665 to 4652, down 0.27%. The growth of domestic production and the weakening of domestic demand diluted China’s demand for imported MEG. At the same time, crude oil fell to US$26/barrel that year. Nearby, the collapse of costs further inhibitsreduced demand, causing China’s MEG imports to fall by 13.67% in 2016 (domestic production increased by 14.02%), prices fell by 9.71% that year, costs collapsed, demand shrank, and the self-sufficiency resonance led to a decline in both volume and price of MEG in 2016;,
The third stage: Following the correction in import volume in 2016, between 2017 and 2020, the annual growth in import volume has basically returned to the level of one million tons, with an average annual increase of 875,200 tons. An increase of 8.16%, which is nearly 30% lower than the first stage. The domestic self-sufficiency rate continues to increase. During the same period, the price fell by 3,244 yuan/ton, a decrease of 45.74%. The average annual price fell by 18.43%. This period was the largest decline in MEG prices since 2011. fast stage. China’s import dependence dropped by 16.14% in 2020 from 2011 to 55.49%.
Looking forward to 2021: As mentioned earlier, China’s production capacity is expected to increase by 42% and output by 14.62% in 2021, while the growth rate of downstream polyester production capacity is within 9%, which will be further squeezed Imports are expected to decline by as much as one million in 2021, or to around 10.15 million tons, and imports are expected to decline by 8.34% year-on-year.
4. The increase in MEG consumption in 2021 is expected to slow down to around 370,000 tons
Domestic indicators reflecting MEG demand include Longzhong will conduct a comparative analysis of the apparent consumption of PET and the actual consumption of MEG in the two dimensions.
Data source: Longzhong Information
According to Longzhong data, a comparison of MEG annual consumption and spot prices from 2011 to 2020 found that the correlation coefficient between the two was 78.14%, and there is a strong correlation between demand and price.
In 2020, China’s apparent consumption of MEG was 19.95 million tons, an increase of 9.87 million tons or 97.99% compared with 2011. In 10 years, China’s consumption of MEG has nearly doubled During the same period, the annual average price fell by 5,334 yuan compared with 2011, with a cumulative decline of 58.91%, and the average annual decline reached 9.21%. (Apparent consumption is calculated based on output, import and export. The main components of domestic supply and demand have been briefly introduced, so I will not go into details here)
Outlook for 2021: According to According to the previous data, the output in 2021 is expected to be 1020, the import is expected to be 1015, and the export is basically negligible. Temporarily using last year’s 11,600 tons data, it can be concluded that the domestic apparent consumption in 2021 is expected to be 20.33 million tons, which is 370,000 tons compared with 2020 consumption. tons, an increase of 1.89%.
The trend of rigid demand consumption from 2011 to 2020 is similar to the price-related appearance, here Needless to say, we focus on 2021. According to Longzhong research data, China’s polyester consumption of MEG will increase by 1.22 million tons in 2021, MEG production will increase by 1.3 million tons, and the accumulated inventory is expected to be 80,000 tons.
5. High inventories will become the norm, and port inventories are expected to accumulate around 100,000 tons at the end of 2021.
According to Longzhong data, based on China’s MEG port inventory monitored by Longzhong Information, As of the end of 2021, the port inventory has increased by 153,900 tons, an increase of 26.53%, and an average annual increase of 2.64%. The price fell by 5,334 yuan during the period, a decrease of 58.09%, and an average annual decrease of 9.21%.
From 2011 to 2015, the ending inventory of MEG port was close to 800,000 tons, an increase of 170,000 tons compared with 2011, an increase of 26.95%, corresponding to a price drop of 3,204 yuan during the same period, a decrease of 34.89%;
From 2016 to 2017, port inventories continued to fall (see the gap between supply and demand in the figure below). The total volume fell for two consecutive years to 287,000 tons. By the end of 2017, the closing port inventories fell to 465,000 tons, a decrease of 38.16%. During the same period, the annual average price increased for the first time in 10 years by 1,693 yuan, an increase of 31.37%;
Entering 2018-2020, it was dragged down by the imbalance of supply and demand growth. , inventory accumulation reappeared, forcing the inventory to rise to around 800,000 tons, with a cumulative increase of 260,000 tons in three years, an increase of 55.91%, corresponding to a price drop of 3,396 yuan/ton, a decrease of 46.87% in the same period.
Data source: Longzhong Information
According to Longzhong data, from 2011 to 2020, China’s MEG generally showed a situation of loose supply and demand. In 6 years, the ending inventory was positive, that is, inventory accumulated during the year. At the same time, prices declined to varying degrees during the inventory accumulation stage, as shown in the figure below:
Data source: Longzhong Information
Main causes of accumulated library The reason is the imbalance between supply and demand. However, since 2020, the imbalance between supply and demand will become more serious. As mentioned earlier, the growth rate of MEG China’s production capacity far exceeds the downstream growth rate by 27 points. The data also shows that the gap between incoming supply and demand continues to expand. , MEG high inventory will gradually become the norm. According to Longzhong research data, it is expected that by 2021, China’s polyester consumption of MEG will increase by 1.22 million tons, MEG production will increase by 1.3 million tons, and the accumulated inventory is expected to be around 100,000 tons.
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