Ethylene glycol has been in a turbulent downward trend since this year.

Since this year, the market of ethylene glycol has been in a turbulent downward trend. On April 26, the average price of ethylene glycol has dropped to 4825 yuan (ton price, the same below), touching a new low in the year, down 16.81% from the beginning of the year. In my opinion, it is almost impossible to stop the recent decline in the ethylene glycol market, which is dominated by sufficient supply, limited demand and high inventory. Overall, the supply was in surplus. By the end of 2018, the production capacity of naphtha to ethylene glycol in China was 6.38 million tons, accounting for 60% of the total production capacity, while that of coal to ethylene glycol was 4.14 million tons, accounting for about 40%. In recent years, the start-up rate of these two process routes is relatively high, naphtha routes is about 81%, which is on the high side; coal-based routes are about 72%, which is on the middle side, and the overall market supply is sufficient. In the long run, ethylene glycol production capacity will expand centrally in the next two years. In 2020, new production capacity will total nearly 10 million tons, annual total production capacity will reach 20 million tons, and market supply will always be under pressure.

On the one hand, from the macro capacity point of view, the growth rate of polyester industry slowed down this year, lower than that of upstream ethylene glycol industry; on the other hand, the seasonal peak season did not materialize. According to past practice, the second quarter is the peak production season of the polyester industry, but from the current market situation, the peak season has not arrived on schedule. In addition, the promotion of the national environmental protection renovation action has also affected the textile industry to a certain extent. Enterprises are relatively cautious in production, and the overall demand is difficult to improve. 

Inventory is at a high level. Looking back at the trend of the ethylene glycol market this year, the two bottoming positions correspond to two high inventory periods respectively, and the market will only recover after the inventory is reduced. At present, the ethylene glycol market has ushered in the third high inventory period this year. As of April 17, the inventory of ethylene glycol ports in East China was about 1.28 million tons, an increase of 47,000 tons over the previous week, reaching a new high in recent five years. Among them, the inventory of Zhangjiagang is 91.7 tons, an increase of 10,000 tons annually, and that of Ningbo is 83,000 tons, an increase of 14,000 tons annually.

In the near future, Ethylene glycol port inventory will remain at a very high level, fearing to drag down market prices.