Ethylene oxide: It runs counter to ethylene glycol, and where will it go?

Today, the ethylene oxide market continues to rise, with East China/North China/Northeast China implementing 10,000 CNY/ton, up 300 CNY/ton, Central China’s external implementation, 10,200 CNY/ton, or 200 CNY/ton, and South China temporarily stabilized at 9900 CNY/ton.

Fundamentals of supply and demand: supply is performing well, demand remains average.

Supply: On the one hand, the supply of raw ethylene was insufficient and the unloading was delayed, which led to the reduced load operation of some purchased equipment; on the other hand, due to the influence of force majeure factors, some ethylene oxide plants were hovering between load reduction and shutdown.

In addition, there are still many sets of installations that have parking maintenance and parking expansion plans in the future, and the supply will be reduced as the installations continue to stop. Therefore, under the condition that the supply is expected to perform well, some industry players are in a good mood for the ethylene oxide market outlook.

Demand: Since mid-September, the downstream polycarboxylic acid water-reducing agent monomer market has opened a continuous upward channel, reaching a maximum of 12,200-12,300 CNY/ton. The main reason is that force majeure factors have caused tight supply of raw materials, ethylene oxide and alcohol, and prices have continued to rise, coupled with the limited inventory of monomers themselves.

Recently, however, the market for polycarboxylic acid water-reducing agent monomers has topped out, some businesses have loosened their offers, and their actual orders have been lowered by 200 CNY/ton. The main reason was the continuous decline in the prices of methanol and ethylene glycol and the rising market risk aversion. In addition, some of the newly-added single devices are put into production and the pace of demand in the northern winter will further slow down.

Affected by the state's regulation of coal prices, the market moved after hearing the wind, and ethylene glycol followed a sharp decline in coal prices. In just a few trading days, the market experienced a continuous decline in the deep V market.

In the absence of a significant decline in crude oil at present, ethylene glycol has fallen sharply, which has greatly reduced the profit of ethylene glycol. The profit of the main process naphtha integrated plant has fallen below the break-even line, and ethylene glycol has been overestimated.

The value has fallen into a low valuation state, but just like the excessive rise in the previous period, there will also be an excessive fall trend. When the bottom is not yet clear, patiently wait for the arrival of new operating opportunities. According to the latest spot price calculation of ethylene glycol in East China today, the price difference between it and ethylene oxide is as high as 4,500 CNY/ton.

Therefore, in summary, long and short are intertwined, and Longzhong Information expects that the ethylene oxide market will be the key to maintaining stable operation in the short term. The weak situation of ethylene glycol will undoubtedly increase the probability of converting the co-production unit to ethylene oxide. At the same time, the price of methanol has fallen, and the production of MTO units will gradually resume or increase.

In mid-November, the supply situation of the ethylene oxide market in various regions will undergo a significant change.