After the Spring Festival, new domestic ethylene glycol production capacity such as Hengli Petrochemical has been gradually released. Demand-side construction starts have been delayed. In addition, at the end of February, the impact of the COVID-19 epidemic spread overseas, international crude oil prices continued to decline, and ethylene glycol cost support was limited. At present, it is difficult to find good news for ethylene glycol. Entering March, where will ethylene glycol go?
1 National policy lends a helping hand
Affected by the epidemic, domestic The downward pressure on the economy is increasing. The government has reduced or reduced rents, taxes, and social security for enterprises, and actively guides enterprises to resume work. At the same time, in addition to issuing huge amounts of reverse repos, the central bank also lowered the winning interest rate for medium-term lending facilities, and domestic financing costs have been reduced repeatedly.
2 Port inventories are at low levels
Data source: Jin Lianchuang
According to data, as of February 20, 2019, the ethylene glycol port The inventory is at 1.092 million tons. As of February 20, 2020, the ethylene glycol port inventory stood at 538,000 tons. Ethylene glycol stocks fell 50.73% year-on-year. Under the current low inventory situation, even if the new production capacity is in normal mass production and the monthly supply is about 100,000 tons, it will be difficult to reach the level of the same period last year within two months.
It closed at 4915 yuan/ton on February 20, 2019. It closed at 4,390 yuan/ton on February 20, 2020. This year’s price is closer to the bottom support price of 4,200-4,300 yuan/ton, and the room for ethylene glycol to fall is limited. On the contrary, it is easier to arouse the interest of long funds.
Although ethylene glycol is currently in a low consolidation stage, there is no need to be too pessimistic about the later trend. As the impact of the epidemic weakens, logistics and transportation between industrial chains have recovered. Downstream polyester and terminal weaving are gradually resuming work, and demand may further increase; the operating rate of ethylene glycol has dropped to 69.60%, and there is currently little supply pressure. It is expected that the supply and demand relationship will show positive development in March, and the upward trend of ethylene glycol is very likely. It is also necessary to pay attention to the port inventory situation and the resumption of downstream work.
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