Upstream decline continues, ethylene glycol valuation passively repairs

Introduction: Recently, the upstream raw materials of ethylene glycol have shown a significant downward trend. Under this influence, the cost pressure of ethylene glycol plants has…

Introduction: Recently, the upstream raw materials of ethylene glycol have shown a significant downward trend. Under this influence, the cost pressure of ethylene glycol plants has been reduced, and the low valuation status has been passively repaired.

Figure 1: Trend chart of main upstream raw materials for ethylene glycol

At present, the main processes of ethylene glycol are naphtha cracking, ethane-ethylene, methanol MTO and coal-synthesis gas.

From the perspective of naphtha, the sharp decline in international crude oil has driven down the price of naphtha. The current CFR Japanese naphtha price is 543 US dollars/ton, a new low since 2022. The naphtha cracking process in China The production capacity accounts for a relatively large proportion, accounting for more than 60% of the production capacity. In addition, the offshore equipment also uses naphtha technology. The trend of lower naphtha prices is difficult to change, causing the naphtha cost to drop significantly.

The ethane-ethylene process is mainly concentrated in the Middle East and North America. Compared with petroleum cracking units, it has a greater cost advantage. Currently, the demand for polyolefins, the main downstream of ethylene, is in a sluggish state, making ethylene face greater supply pressure. This affects Next, the price decline of ethylene is also quite obvious. As the cost of ethylene glycol operating rates in the Middle East and North America decreases, the operating conditions improve and the import volume to China is expected to increase. Currently, the main source countries of China’s imports are from the Middle East and North America. Therefore, the import volume will be affected by this. There was significant growth from the lows during the year.

Coal prices have also seen a significant decline recently. The supply of imported goods has increased, and terminal demand is poor. Manufacturers and terminal inventories are at high levels. The contradiction between supply and demand is prominent, which has put pressure on the market. There is currently no sign that coal has stopped falling. In the future, While there is still room for further exploration, the cost of coal production is on an obvious downward trend. The coal chemical process is unique to my country, and its production capacity accounts for more than 30% of the total domestic production capacity. The decline in coal is conducive to improving the cash flow of coal production plants. At present, coal The manufacturing operating rate is at a low level during the year, costs have declined, and factory operating conditions may be significantly improved.

Looking at the trend of methanol, the downward trend caused by falling coal prices and sluggish demand for olefins is difficult to change. The cost of the methanol MTO process will also decline. However, due to the relatively small proportion of domestic MTO device production capacity, the impact on the supply side is limited.

Figure 2: Comparison of mainstream market trends of ethylene glycol

Compared with upstream raw materials, although ethylene glycol has declined, the decline is not significant. From the mainstream market, the current spot price is 3,880 yuan/ton, which is a drop of around 4% compared to the price last month, and the drop is far greater. Lower than upstream raw materials, ethylene glycol valuations were passively restored, but the decline in raw materials did not stop, putting the market under downward pressure.

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Author: clsrich