Forecast of ethylene glycol market development in 2021

In 2020, the weight of ethylene glycol will move forward. The normalization of high port inventory and the large-scale commissioning of new production capacity during the year have caused the market price of ethylene glycol to remain at a low level during the year. Then, can ethylene glycol regroup in 2021?

As of the third quarter of 2020, domestic ethylene glycol production capacity was 14.016 million tons, of which coal production capacity was 5.29 million tons, accounting for 37.74% of total production capacity, petroleum production capacity was 7.806 million tons, accounting for 55.69% of total production capacity, and methanol production capacity was 920,000 tons. Tons, accounting for 6.57% of total production capacity. In the first three quarters of this year, the newly added capacity was 2.25 million tons, and it is estimated that the new annual capacity will be 4.65 million tons, and the annual production capacity will reach 16.616 million tons, with a capacity growth rate of 39.52%. Most of the newly increased production capacity this year are large-scale refining and co-production equipment. Among them, the full commissioning of two petroleum production lines (90+900,000 tons) of Hengli Petrochemical will have a greater impact on the market supply side this year.

By 2021, the capacity of newly-invested ethylene glycol is expected to be 6.47 million tons. By then, the total domestic ethylene glycol production capacity will reach 22.986 million tons, and the growth rate of production capacity is expected to reach 38.94%. The total domestic supply is expected to reach 21.568 million tons, of which the satellite petrochemical's new production capacity of 1.82 million tons in 21 years will greatly impact the market. However, the growth rate of downstream polyester production capacity has slowed down. It is estimated that by 20201, the domestic polyester production capacity will reach 68.335 million tons, and the demand for ethylene glycol will be 18.8979 million tons. It can be seen that the oversupply of ethylene glycol is still intensifying by 2021.

From the perspective of capacity clearance, the operating rate of coal-to-ethylene glycol is 51.54% at the current market price, and some coal-to-glycol plants with more advanced processes still have profit margins at the current price. In addition, most of the newly-added coal-based plants are based on co-production, and the ability to resist risks has been improved. Therefore, it is difficult to clear large-scale production capacity in a short period of time. There is still a long way to go for the ethylene glycol market to balance supply and demand.

On the whole, there is still uncertainty about crude oil and Sino-US trade relations on the macro side, which worries the market. And because it is difficult to eliminate backward production capacity in a short time, the oversupply situation will continue in 2021. In the follow-up, we still need to pay attention to the progress of new production capacity and whether the "new pneumonia" epidemic will become normalized and continue until 2021.