Since the second quarter, international crude oil prices have gradually stopped falling and stabilized. Under the influence of cost support, ethylene glycol futures bottomed out and showed an oscillating upward trend. Since June, as international crude oil prices have peaked, ethylene glycol has lacked momentum and prices have gradually weakened. From a technical point of view, ethylene glycol futures have a trend of going out of the arc top.
Supply pressure has increased
Since the second quarter, as international crude oil prices have nearly doubled, cost support and the improvement of market atmosphere have , domestic chemical futures experienced a restorative rebound, but the supply and demand pattern did not improve significantly.
From a supply perspective, as international crude oil prices are at a low level, the cost advantage of coal-to-ethylene glycol is no longer available, resulting in a significant drop in the initial load of coal-to-ethylene glycol. However, as the price of ethylene glycol slowly rebounds, the start-up load of coal-based ethylene glycol has also slowly rebounded since the beginning of June. As of early July, the domestic coal-to-ethylene glycol operating load was 41%, an increase of 8 percentage points from the year’s low; the non-coal-to-ethylene glycol operating load was 60%, an increase of 5 percentage points from the year’s low. In July, two units of Tongliao Jin and Inner Mongolia Xinhang Energy, totaling 660,000 tons/year, are scheduled to be overhauled. Judging from the current news, four units of 1.06 million tons/year, including Inner Mongolia Rongxin, will be overhauled. Production has resumed, and domestic ethylene glycol supply has shown a slight increase.
Influx of imported goods
Although there is currently no advantage in the price of domestically imported ethylene glycol, major foreign economies have been seriously affected by the epidemic, resulting in the international market Supply is abundant and there is still a large amount of ethylene glycol flooding into the domestic market. Data released by the General Administration of Customs shows that domestic ethylene glycol imports from March to May were 2.9055 million tons, an increase of 7.52% compared with the same period last year, while imports from March to May last year decreased by 2.38% year-on-year. The supply of imported goods is constantly impacting the domestic market.
Under the pressure of dual supply at home and abroad, domestic ethylene glycol stocks continue to rise. As of July 9, ethylene glycol stocks in East China reached 1.397 million tons, an increase of 1.044 million tons or 395.75% from before the Spring Festival; an increase of 343,000 tons from the same period last year, a year-on-year increase of 32.54%. Overall, the supply pressure of ethylene glycol is relatively high, and the price is difficult to change.
It is difficult for demand to improve
The end-use textile and clothing industries of ethylene glycol are relatively dependent on exports. Affected by the epidemic, the clothing industry has suffered unprecedented losses this year. impact. From March to May, domestic apparel exports were US$22.154 billion, a US$8.362 billion decrease from the same period last year. You must know that the Sino-US trade friction had an adverse impact on domestic apparel exports last year, and export performance was poor. This year, under the influence of the epidemic, clothing exports have declined further, which will reduce the demand for chemical fiber products.
Although summer clothing consumption is coming to an end, due to good bottle flake consumption, polyester can still maintain a relatively high operating load of 87.92%. However, many polyester companies are currently planning maintenance. In the future, the operating load of polyester will further decline, and the demand for ethylene glycol will weaken.
To sum up, since the second quarter, the rebound in ethylene glycol futures is largely due to the strengthening of international crude oil prices. However, as international crude oil prices stagnate, , the momentum that previously supported the rise in ethylene glycol prices ran out. At the same time, domestic ethylene glycol production load has increased, imports have remained high, inventories have reached record highs, and supply pressure has continued to increase. In addition, affected by the epidemic, terminal apparel exports continued to decline, and demand for polyester declined. In this state, the author believes that supply and demand will gradually become the dominant factor affecting ethylene glycol prices. As oversupply continues to worsen, ethylene glycol prices will continue to weaken and test the previous low of 3,100 yuan/ton. support. </p
