The current supply of ethylene glycol is still tight

In the near future, we need to pay close attention to the production progress of the 1.58 million tons of satellite petrochemical equipment. If it is launched as scheduled, it will bring an increase of 120,000 tons in April, which will have a greater impact on the 2105 contract price. The 2109 contract has potential negative factors for the launch of new production capacity and the recovery of imports. The fundamentals of the 2105 contract are stronger than the 2109 contract.

　　 Recently, the price of EG rose rapidly after a sharp rise. As of March 9th, the 2105 contract closed at 5506 CNY/ton. Since February, the ethylene glycol basis and the contract price difference between May and September have been significantly stronger, and manufacturers of mainstream production routes have made huge profits. We believe that the previous EG increase is driven by tight supply and cost. It is expected that EG supply will be tight first and then loosened during the year, and the temporary supply will be tight or continue until mid-May.

　　Port inventory is still in a downward channel

　　 At present, the dependence on ethylene glycol imports is around 55%, and overseas supply is a more important variable. In the fourth quarter of last year, domestic ports had a greater effort to destock. The main port of ethylene glycol in East China dropped from a high of 1.4 million tons in July last year to around 700,000 tons at the end of the year. This was mainly due to the continuous decline in imports due to more failures in overseas installations. In January this year, the expected recovery of port stocks has been delayed. The stocks have been in the channel of decontamination. The newly announced port stocks of 670,000 tons have returned to a relatively low level. In February, the seasonal overhaul of overseas installations and the large-scale shutdown of the North American ethylene glycol installations due to the cold wave involved a total production capacity of 3.625 million tons. The loss of overseas installations is expected to be close to 400,000 tons, causing market concerns about whether domestic ethane supply will be interrupted. Taking into account factors such as shipping schedules, we believe that ethylene glycol imports in March may be affected, and port inventories will still be in a downward channel, with absolute values remaining low.

　　Domestic increase is concentrated in the third and fourth quarters

　　 There are several syngas installations planned to start-up in the first quarter. Although some installations have entered the trial operation process, the progress has been slow and no substantial supply increase has been formed. The pressure of new installations may be released in the third and fourth quarters. In March, we will focus on the production progress of the 1.38 million tons of satellite petrochemical equipment. If it is launched as scheduled, it will bring an increase of 120,000 tons in April, which will have a greater impact on the 2105 contract price; if the commissioning is delayed, the supply pressure will be concentrated on the third and fourth. Quarter.

　　The recovery of the downstream polyester market exceeds expectations

　　Before the Spring Festival, most polyester factories fell negative, but the changes in polyester start-up were relatively limited. After the holiday, the terminal recovery exceeded expectations. The polyester factory resumed production faster than in previous years. It is expected that the polyester load will increase to 93% in March. Relevant data show that the polyester production will increase to 160,000-162,000 tons per day in early March. As of March 5, the domestic ethylene glycol load was around 75%. At present, the mainstream production routes of ethylene glycol are highly profitable. Driven by high profits, the operating rate has room for further improvement but the rate is relatively small. An optimistic estimate is that if the average operating rate of ethylene glycol in March is maintained at 75%, domestic EG production will be close to 1 million tons, while EG imports are estimated at 660,000 tons, and the total domestic ethylene glycol supply in March will be about 1.66 million tons. In terms of demand, the downstream polyester production is expected to be close to 5 million tons, equivalent to about 1.67 million tons of ethylene glycol demand, plus 90,000 tons of ethylene glycol used in other fields, and the total domestic ethylene glycol demand in March is about 1.76 million tons. Therefore, it is estimated that about 100,000 tons of ethylene glycol will be destocked in March. Based on the recovery of EG supply and downstream demand, we believe that the supply and demand of EG will continue to improve in March, and the price of EG will have certain support.

　　 In summary, we believe that the supply of EG was still tight before mid-May. With the recovery of domestic terminal demand in March, coupled with the continued tight overseas supply, imports remained low, and the price of ethylene glycol still had upward momentum. In the near future, we need to pay close attention to the production progress of the 1.58 million tons of satellite petrochemical equipment. If it is launched as scheduled, it will bring an increase of 120,000 tons in April, which will have a greater impact on the 2105 contract price. The 2109 contract has potential negative factors for the launch of new production capacity and the recovery of imports. The fundamentals of the 2105 contract are stronger than the 2109 contract.