Ethylene glycol's price continues to bottom in the short term

Affected by social and public events, crude oil prices ushered in a "cliff-like" decline in the first quarter. The domestic and foreign textile and apparel markets have been hit successively, but the supply of ethylene glycol has increased significantly over the previous year. The collapse of costs and the contradiction between supply and demand have highlighted the price of ethylene glycol, and the coal chemical plant has been under greater pressure for loss, but the maintenance has been delayed. On the whole, multiple negatives still exist, and the price of ethylene glycol will continue to bottom out.

Supply pressure has not been relieved

In the first quarter, U.S. crude oil prices fell from more than US $ 60 / barrel to below US $ 20 / barrel, naphtha prices fell below US $ 200 / ton, and the corresponding ethylene glycol cost price was 2,600 CNY/ton. The spot price of alcohol fell to 3150 CNY/ton. At the same time that the collapse of costs caused a significant drop in the price of ethylene glycol, the production profit of the integrated naphtha unit continued to rise, the production enthusiasm increased significantly, but the coal price was relatively strong. Therefore, the production cost of coal chemical plants is maintained at a high level, but the price of coal-to-ethylene glycol can only follow the market. The price of ethylene glycol for synthesis gas fell to the ex-factory price of 2750 CNY/ton, calculated according to the current general cost formula The loss per ton of coal chemical industry is about 1,000 yuan.

Of course, due to differences in technical processes, funding sources, raw material composition, etc., the cost composition of each set of equipment varies greatly, but for the price of ethylene glycol below 3200 CNY/ton, most coal chemical plants have no profit. Maintenance of coal chemical plant may increase. At present, there are 3 sets of Henan Coal Industry with a total of 600,000 tons, Hubei Chemical Fertilizer 200,000 tons, Yangmei Coal Pingding 200,000 tons, Xinjiang Tianying 150,000 tons, etc. A total of 1.15 million tons of devices are being shut down. Tons. If all the above devices are shut down due to losses, the operating rate of coal-based EG will drop to about 50%. However, this year, Hengli ’s 1.8 million tons and Zhejiang Petrochemical ’s 750,000 tons of equipment are in normal production. The petroleum production output has increased significantly, and the downstream polyester operating rate is at a low level in the same period of the previous year, and the consumption of raw materials is low. According to CCF statistics, the domestic comprehensive ethylene glycol operating rate is 76.3% and the coal-based operating rate is 70.76%. If the coal-based operating continues to decline to about 50% in the later period, the ethylene plant will continue to operate normally, and the domestic ethylene glycol comprehensive operating The rate may fall below 70%, and it is still difficult to change the situation of the reservoir.

Overall, the sharp drop in crude oil prices has caused ethylene glycol prices to continue to fall, which has a greater impact on the coal-to-ethylene glycol market. However, the profitability of integrated naphtha plants is positive. Pressure has not eased due to falling prices.

Both consumption and exports fell

The downstream consumption of ethylene glycol is mainly concentrated in the textile and apparel market. Due to the impact of public events in the first quarter, domestic consumption and exports of textile and apparel both declined. Statistics from the Bureau of Statistics show that domestic retail sales of textiles and apparel fell by more than 30% from January to February; data from the General Administration of Customs showed that the cumulative value of Chinese textiles and apparel exports from January to February decreased by about 20% year-on-year. At present, foreign public events have intensified, and China's textile and apparel export orders have been greatly affected. It will continue to affect China's textile and apparel market in the second quarter.

At present, most of China's regions have resumed production and production, but the textile and apparel market has resumed production about 3 weeks later than expected. The load of Jiangsu and Zhejiang looms rebounded to 73% in mid-March, but recently fell to below 70% again. Polyester The operating rate has rebounded to 84%, which is lower than the same period in previous years, the consumption of raw materials is at a low level, and due to shrinking consumption, the polyester yarn inventory is high, and the operating rate of polyester may decline again in the later period. In addition, the port inventory of ethylene glycol has rebounded to more than 1.16 million tons, and there is an expectation of continued accumulation. Therefore, under the influence of social public events, weak consumption has caused ethylene glycol inventories to continue to rise, and prices are therefore under pressure.

Based on the above analysis, the plunge in crude oil prices collapsed the cost of ethylene glycol and prices continued to fall. At the same time, the profitability of the integrated naphtha plant has improved significantly, and production enthusiasm has increased, but the cost pressure of coal chemical plants is greater and the reduction in plant output is expected to be stronger. The textile and apparel market has shrunk due to social public events, the consumption of ethylene glycol is weak, and the accumulation situation is difficult to change. On the whole, bearish fermentation continues, and ethylene glycol prices will continue to bottom out.