Cost support is strong, glycol prices gradually higher

Glycol price trend chart in China

In September, international crude oil prices continued to rise. As of September 28, NYMEX crude oil futures contract 11 rose to 75.29 DOLLARS per barrel.  ICE fabric 11 rose to $79.09 / BBL;  The price of 5500 CAL thermal coal rose to 1600 CNY/ton.  Affected by the policy, terminal demand is flagging, double raw material supply tightening, downstream polyester also constantly reduce load.  But during the same period glycol plant load significantly reduced, the overall market supply and demand tight balance, superimposed cost pull, ethylene glycol market before rising.  

The cost side: crude oil support obviously.

In September, although Opec and its Allies maintain the original production policy plan unchanged, but the US crude oil inventories continuously declined, supply tightening expectations continued.  The us dollar tends to weaken, the US unemployment report is good, the interruption of Hurricane IDA also supports the market atmosphere,  the cold winter and the ease of the epidemic may boost demand, international oil prices hit a new high this year and rose to the highest in nearly three years.  The NYMEX crude oil contract rose to 75.29 dollars per barrel on Thursday.  ICE fabric 11 rose to $79.09 / BBL.

Thermal coal continues to rise, and constantly refresh the record high, in the past 500-700 CNY/ton between, the third quarter of this year broke the 1000 yuan mark, came to 1600 CNY/ton, up nearly 170%. Coal supply side increment is limited, the fourth quarter is difficult to improve; Due to the impact of the public health incident, part of the orders of light industry and low-end manufacturing industry flowed into China. Industrial electricity consumption increased greatly. With little change in supply and more demand, coal prices are rising.

The supply side:

In September, the domestic ethylene glycol plant was affected by faults and policies, and the overall start-up load was significantly reduced. By The 28th, the coal chemical load was reduced to 38.83%, and the integrated plant start-up load was reduced to 65.9%.

The recent shutdown capacity of domestic installations involves 4.77 million tons, and the later maintenance capacity is 1.45 million tons. There are still uncertain factors. I heard that some factories in North China still have the probability of lowering due to the tight load of coal. In the fourth quarter, domestic enterprises started down, imports are still not expected to increase significantly, and the trend of total supply decline still exists.

As of September 28, the impact of power restriction is aggravated, mainly involving weaving and downstream dyeing factories. Among them, many sets of polyester devices reduced production and were repaired, and the average load decreased to 80.89%. The device was still repaired in the later period, and the load would further decrease. The comprehensive opening probability of chemical fiber weaving in Jiangsu and Zhejiang decreased to 54.23; The probability of printing and dyeing in Jiangsu and Zhejiang decreased to 33.19%.

 The above data show that the terminal impact is the largest, followed by downstream polyester enterprises, but the price of PTA and MEG double raw materials, cost pressure polyester follow up the price, but the range of follow up insufficient, equivalent to disguised price promotion, downstream polyester enterprises good production and marketing, polyester enterprise pressure in a short time still exists.

To sum up: the domestic glycol market will focus on the cost and supply side. Crude oil and coal prices are easy to rise, but not easy to fall. Due to policy and equipment reasons, the increment of domestic enterprises is limited, the total import volume is expected to be low, and the impact of unloading delay, the overall tight supply pattern will continue. The terminal is affected by the policy, the negative reduction shutdown is more obvious, downstream polyester sales pressure is high, the starting load is also declining, in a short time supply and demand will maintain a tight balance. Domestic glycol market easy to rise difficult to fall the trend still continues.