Ethylene glycol price fluctuations are further amplified

On January 12, boosted by factors such as rising international oil prices and unexpected declines in port inventories, the ethylene glycol futures price rose sharply by nearly 3%. On the 14th, the price of ethylene glycol fell by more than 3% as the market fell. The volatility of futures prices was further enlarged. As of the close on January 15, the main ethylene glycol contract EG2105 was quoted at RMB 4,434/ton. Regarding the market outlook, we believe that due to factors such as the destocking of port inventory that boosted the ethylene glycol futures price in the early stage, the market has gradually absorbed the market, the medium-term supply and demand situation is expected to weaken, and the accumulation of port inventory will be inflection point. Obviously, therefore, the ethylene glycol will oscillate weakly in the later period.

In the later stage, the supply pressure is higher

According to the currently announced plan, in January 2021, three domestic ethylene glycol plants with a total capacity of 1.2 million tons/year are planned to be overhauled. Therefore, despite the restart of the pre-maintenance equipment, the start of domestic ethylene glycol plants is still at a low level. The pressure on the ethylene glycol supply side is relatively small. As of January 14, the comprehensive daily operating rate of ethylene glycol was 58.82%, a decrease of 9.6% from the same period in 2020; the operating rate of oil-based plants was 63.86% and that of coal-based plants was 49.92%.

2021 will still be the year for the new ethylene glycol plant to be put into operation. It is estimated that 9 sets of units with a total capacity of 5.84 million tons/year will be put into operation. Among them, the two units of Shaanxi Weihe Chenzhou Chemical and Jianyuan Coal Coking are planned to be put into operation at the end of January. As the plan progresses smoothly, the annual domestic ethylene glycol production capacity will be increased to 16.241 million tons at the beginning of February, an increase of 3.57% from the end of 2020. Due to the relatively short maintenance period of the domestic ethylene glycol plant in January, with the resumption of production at the end of January, the start-up rate of the domestic ethylene glycol plant will be increased to more than 60%. Under the dual influence of the start-up and the launch of new production capacity, the pressure on domestic ethylene glycol supply in the later period is still relatively high.

Weakening demand and expectation increase

In December 2020, domestic polyester factories began to gradually release their equipment maintenance plan. Judging from the latest statistics, a total of 7.16 million tons/year production capacity devices have announced their maintenance plans, of which the annual production capacity of the maintenance devices in December 2020 will be 2.05 million tons, and the annual production capacity of the maintenance devices in January 2021 will be 3.8 million tons.

As of January 15, 2021, the domestic polyester comprehensive daily operating rate was 82.72%, an increase of 7.16 percentage points from the same period in 2020; from the perspective of equipment maintenance, the annual production capacity of the equipment currently under maintenance is 3.445 million tons. In the remaining time of January, there will be 2.405 million tons/year production facilities shut down for maintenance. With the increase of maintenance equipment, the start of polyester end is expected to further decline, and the weakening of ethylene glycol demand is expected to gradually increase.

The inflection point of inventory accumulation has moved back again and again

With the restart of the ethylene glycol plant that was overhauled overseas, domestic ethylene glycol imports have rebounded. Starting from late December 2020, the ethylene glycol planned to arrive at East China Port has increased significantly. According to the latest forecast, from January 14 to 20, 2021, the planned arrival of ethylene glycol will be 157,000 tons, and the average weekly scheduled arrival of the last five weeks will be 198,900 tons, which is an increase from the average of the fourth quarter of 2020. 59,200 tons. Although the planned arrival of cargo has increased significantly, due to the weather and human factors, the actual inbound cargo is lower than expected due to the closure of the channel due to weather and human factors. Therefore, the port ethylene glycol inventory continues to show a trend of de-stocking, accumulating a turning point Move back again and again. As of January 14, the ethylene glycol inventory at East China ports was 708,400 tons, an increase of 350,900 tons over the same period in 2020. As the Yangtze River channel returns to normal, it is expected that the incoming cargo will increase, and the ethylene glycol port inventory will once again enter the state of accumulation.

With the restart of supply-side equipment and the commissioning of new equipment, the contradiction between supply and demand of ethylene glycol is expected to intensify once the demand gradually weakens; with the restoration of the Yangtze River channel, the inventory of ethylene glycol in East China ports is expected to enter accumulation again Status, while the current inventory is still at a historical high level, the pressure on ethylene glycol port inventory will increase again. On the whole, we believe that due to the early positive factors being gradually digested by the market, ethylene glycol is expected to run mainly due to weak oscillations when the fundamentals turn weak in the later period.